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2024 (1) TMI 983 - AT - Service TaxClassification of service - service rendered by the appellant during the period 2004-05 to May 2007 to M/s. Manyata Promoters Pvt. Ltd. M/s. Golf Link Software Park Pvt. Ltd. - Management Consultancy Service or not - invocation of Extended period of limitation - penalty - CENVAT Credit - HELD THAT - The fees for rendering the service prescribed under Clause 5.2.1 to be paid to the appellant is 5% of the expenditure incurred on the construction and development of the project; also the computation of the construction and development expenses are prescribed at Clause 5.2.3. of the agreement. Analysing the stipulations of the said Agreement dated 31.3.2005, it cannot be said that the arrangement between the appellant and M/s. Manyata Promoters Pvt. Ltd. for execution of the project as a whole; on the contrary, it reveals that appellant has been engaged to advise/assist M/s. Manyata Promoters Pvt. Ltd. in implementation and completion of the project. Therefore, the claim of the appellant that they have been appointed to execute the project has been rightly rejected by the learned Commissioner as the activities/performance stipulated under the Agreement clearly discloses that the services rendered in the management of the project for its completion by engaging suitable contractors, subcontractors, team of professional, obtaining approvals etc.; thus, in the nature of advice, consultancy or technical assistance. No contrary evidence has been placed by the Appellant to rebut the said finding of the Commissioner. In the present case, commencing from identification of the contractors, sub-contractors, professional team, day-to-day management of cash flow, completion of the project in accordance with plan, etc., with active participation and advice of the appellant from time-to-time rendered to M/s. Manyata Promoters Pvt. Ltd., fall within the scope of advice, consultancy or technical assistance - The claim of the Appellant that it becomes taxable only with effect from 01.06.2007 under the Management or Business Consultancy Service is not sustainable. Extended period of limitation - Penalty - HELD THAT - The explanation furnished by the appellant to justify non-payment of service tax is not convincing and hence not acceptable. On the contrary, analysing the statements the learned Commissioner at para 44-45 of the impugned order held that there is mis-declaration and suppression of facts. In these circumstances, invocation of extended period of limitation is sustainable. Consequently, the penalty imposed on the appellant under Section 77 and 78 of the Finance Act, 1994 are also justified. However, penalty imposed under Section 76 along with Section 78 cannot be sustained. CENVAT credit of the service tax paid on various input services while rendering the taxable service - HELD THAT - The appellants are eligible to avail CENVAT Credit of service tax paid on input services subject to production of necessary documents which would be scrutinised and CENVAT credit, if any, admissible be allowed. Similarly, the learned Commissioner also though accepted in principle that benefit of cum-tax value can be extended to the Appellant but did not consider the same, as necessary evidence has not been placed indicating the value charged has been inclusive of tax. Thus the impugned order is modified and the issue of classification of service under Management Consultancy service and confirmation of the demand of service tax with interest for the period in question and penalty under Section 77 and 78 of the Finance Act, 1994 is upheld; penalty imposed under Section 76 is set aside; cum-tax value and CENVAT credit be allowed subject to scrutiny of the documents - The matter is reamended accordingly to recompute the liability. Appeal allowed by way of remand.
Issues Involved:
1. Classification of services rendered by the appellant under the category of 'Management Consultancy Service' and the applicability of Service Tax for the period 2004-05 to May 2007. 2. Admissibility of CENVAT credit for the said period if the services are held to be taxable. Summary: Issue 1: Classification and Taxability of Services The appellant provided services to M/s. Manyata Promoters Pvt. Ltd. and M/s. Golf Links Software Park Pvt. Ltd. during the period 2004-05 to May 2007. The Commissioner classified these services under 'Management Consultancy Service' and confirmed the demand for Service Tax amounting to Rs. 8,15,12,315/- under the proviso to section 73(1) of the Finance Act, 1994. The appellant argued that the services rendered were 'Business Consultancy Services,' which became taxable only from 01.06.2007, and that their activities were executory in nature, not advisory or consultancy. The Tribunal examined the agreement dated 31.03.2005 and concluded that the appellant's role was to manage the overall implementation of the project, not to execute it. The appellant's activities included supervising, coordinating, and advising M/s. Manyata Promoters Pvt. Ltd., which falls under the scope of 'Management Consultancy Service.' The Tribunal found no contrary evidence to rebut the Commissioner's findings. The judgments cited by the appellant were found not applicable to the present case. Issue 2: Admissibility of CENVAT Credit The Commissioner denied the CENVAT credit claim due to the appellant's failure to produce documentary evidence. The Tribunal upheld the Commissioner's decision but allowed the appellant to avail CENVAT credit of service tax paid on input services, subject to the production of necessary documents for scrutiny. Similarly, the Tribunal accepted the principle of extending the benefit of cum-tax value to the appellant, provided necessary evidence is submitted. Extended Period of Limitation The Commissioner invoked the extended period of limitation, citing the appellant's failure to register, non-filing of statutory returns, and suppression of facts. The Tribunal upheld this decision, noting that the appellant collected service tax on a few occasions but did not deposit it with the department, indicating suppression and mis-declaration of facts. Penalties The Tribunal upheld the penalties imposed under Sections 77 and 78 of the Finance Act, 1994, but set aside the penalty under Section 76, as simultaneous penalties under Sections 76 and 78 are not sustainable. Conclusion The Tribunal modified the impugned order, upholding the classification of services under 'Management Consultancy Service,' confirmation of the demand with interest, and penalties under Sections 77 and 78. The penalty under Section 76 was set aside. The Tribunal remanded the matter for recomputation of liability, allowing cum-tax value and CENVAT credit subject to scrutiny of documents. (Order pronounced in Open Court on 19.01.2024)
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