2018 (6) TMI 713 - AT - Service Tax

Management Consultant Service - non-discharge of service tax - penalty - Held that - Though the appellant argues that this amount is not received towards consideration and the amount is only towards ticket charges, no documentary proof has been placed by the appellants. Therefore, the contention of the appellant that these are not consideration/charges received for the services rendered is not acceptable - demand of tax with interest upheld. Penalty u/s 78 - Held that - As the appellant has declared the amount in their accounts from where the department has come to know about the receipt of the same, penalty imposed is unwarranted. Appeal allowed in part.

Summary

Issues:
Service tax liability on management consultancy services provided by the appellant without payment.

Analysis:
The appellant, engaged in manufacturing various products, also provided management consultancy services without discharging the service tax liability. The authorities issued a Show Cause Notice demanding service tax, interest, and penalties. The original authority and the Commissioner (Appeals) upheld the demand and penalties under section 78, while setting aside penalties under sections 76 and 77 of the Finance Act, 1994. The appellant contested, claiming the amount received was only for air ticket charges, not for services rendered.

The Tribunal examined the records and confirmed the demand of &8377; 23,076 under Management Consultancy Service. Despite the appellant's argument that the amount was for ticket charges and not consideration for services, no documentary proof was provided. However, noting that the appellant declared the amount in their accounts, the Tribunal found the penalty imposed unwarranted. The appellant's explanation for not paying the service tax, due to misunderstanding about the taxability of ticket charges, was considered. Consequently, the penalty under section 78 was set aside, without altering the duty amount or interest. The appeal was partly allowed, granting consequential reliefs if any.

Additionally, a Miscellaneous Application by the department for amending the Cause Title was allowed by the Tribunal. The operative part of the order was pronounced in open court, finalizing the decision on the service tax liability issue related to the management consultancy services provided by the appellant.