2023 (1) TMI 592 - AT - Service Tax

Classification of services - scientific and technical consultancy services or not - appellant is a semi-autonomous organisation created to promote the productivity in industry, agriculture and other sectors of economy - Includability of expenses claimed by the appellant as reimbursable expenses in the gross value - time limitation - penalty - HELD THAT - The scientific and technical consultancy means an advice, consultancy or scientific or technical assistance rendered in any manner either directly or indirectly by scientists or a technocrat or in his or technical institutions or organisation. The training programmes conducted by the appellant squarely fall in this category and there are no reason to deviate from the previous decision of this Tribunal in the appellant s own case M/S NATIONAL PRODUCTIVITY COUNCIL VERSUS CCE, CHANDIGARH 2008 (8) TMI 26 - CESTAT, NEW DELHI where it was held that thrust of the Appellant s activity is conducting scientific research related to productivity and undertaking technical study in this regard for their clients and tendering advice to them for optimizing their productivity, hence appellant is more appropriately covered under Scientific or Technical Consultancy Service than Management Consultancy . Includability of expenses claimed by the appellant as reimbursable expenses in the gross value - HELD THAT - In the impugned order, the Commissioner (Appeals) has already held that the board and lodging facilities provided for training would not form part of the gross value whereas expenses in other heads such as printing, stationery and miscellaneous expenses will be part of the gross amount. There are no good reason to deviate from this decision. Time Limitation - HELD THAT - The Commissioner (Appeals) held that the demand from the period July, 2001 to March 2004 was time barred as the extended period of limitation could not be invoked. The Commissioner (Appeals) has also accepted the appellant s contention that amounts received by it for service should be treated as cum-tax receipts and the service tax should be calculated backwards. There is no appeal against this part of the order. Penalty - HELD THAT - The penalty under section 78 which requires fraud or collision or wilful mis-statement or suppression of facts or violation of any provisions or Act or Rules with intent to evade the payment of service tax was also set aside by the Commissioner (Appeals) - The penalty under section 76 is a simple penalty for failure to pay service tax where none of the aforesaid elements are present. This penalty has been upheld by the Commissioner (Appeals). The Commissioner (Appeals) has also upheld the mandatory interest under section 75. Appeal dismissed.

Summary

Issues:
1. Appellant challenging order-in-Appeal passed by Commissioner (Appeals) Jaipur regarding service tax determination.
2. Classification of services provided by the appellant under "scientific and technical consultancy services."
3. Includability of expenses claimed by the appellant in the gross value.
4. Limitation period for the demand of service tax.
5. Penalty under sections 76 and 78, and interest under section 75.

Analysis:

1. The appeal was filed by M/s National Productivity Council against the order-in-Appeal passed by the Commissioner (Appeals) Jaipur, which partly allowed the appeal and remanded the case for fresh determination of service tax. The Department found that the appellant had not paid service tax on the gross amount charged from customers but after deducting various expenses. A show cause notice was issued demanding service tax, interest, and penalties under relevant sections of the Finance Act, 1994.

2. The key issue was whether the services provided by the appellant, which included conducting training programs for industries, fell under "scientific and technical consultancy services." The appellant argued that these services did not fall under this category, while the Revenue representative contended that they did, citing a previous decision by the Tribunal in the appellant's own case.

3. The Tribunal analyzed the nature of scientific and technical consultancy services, concluding that the training programs conducted by the appellant fit within this category. The expenses claimed by the appellant were also examined, with the Commissioner (Appeals) already ruling that certain expenses would be part of the gross value while others, like board and lodging facilities, would not.

4. Regarding the limitation period for the demand of service tax, the Commissioner (Appeals) held that the demand for a specific period was time-barred, and the treatment of amounts received for services as cum-tax receipts was accepted. The penalty under section 78 was set aside, but the penalty under section 76 for failure to pay service tax was upheld along with the mandatory interest under section 75.

5. Upon reviewing all aspects and perusing the records, the Tribunal found no reason to interfere with the impugned order. Consequently, the impugned order was upheld, and the appeal was dismissed, with the penalty under section 76 and interest under section 75 being sustained while the penalty under section 78 was set aside.

This comprehensive analysis covers the various issues addressed in the legal judgment, providing a detailed insight into the Tribunal's decision and the reasoning behind it.