2024 (2) TMI 962 - AT - Service Tax

Classification of services - management and business consultant service - credit card, debit card, charge card or other payment card services - negative listed services or not - exempted under Notification No.25/2012-ST Serial No.29 (g) dated 20.06.2012 or not - HELD THAT - It is not found that the appellants are engaged in any activity or any advice, consultancy or technical assistance in relation to financial management, human resources, marketing management/logistics management, procurement and management and management of information technology resources or other similar areas of management services - the activity of disbursal of wages to the unskilled rural labours as a measure of employment generation under Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), does not cover under Management and Business Consultant Services. Therefore, for the period prior to 01.07.2012, the appellants are not liable to pay service tax. The adjudicating authority has held that as there was an agreement and in terms of the agreement, the service tax was inclusive which is to be borne to the appellants. Therefore, all the services provided by the appellants are inclusive of service tax, therefore, they are liable to pay service tax - as the services provided by the appellants are exempted from payment of service tax, therefore, they are not required to pay any service tax as the appellant has not collected any service tax. Further, the service rendered is inclusive of service tax, it does not mean that if the service itself is exempted, the assessee is liable to pay service tax. The impugned order is set aside - appeal allowed.

Summary

Issues:
The judgment involves the issue of demanding service tax under the category of management and business consultant service and credit card, debit card, charge card or other payment card services which are under negative list of services after 01.07.2012.

Summary:

Issue 1:
The primary issue in the case was whether the appellants were liable to pay service tax for the activities undertaken as business correspondents for disbursal of wages to unskilled rural laborers under Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA).

The Revenue contended that the appellants' activities fell under the category of "Management & Business Consultant Service" and "Credit Card, Debit Card or other payment card Services."

Decision 1:
The Tribunal examined the definition of "Management or Business Consultant" under Section 65(105)(r) of the Finance Act, 1994, and concluded that the appellants were not engaged in providing advice, consultancy, or technical assistance in areas such as financial management, human resources, marketing, logistics, or information technology. Therefore, the activity of disbursal of wages did not fall under "Management and Business Consultant Services," and the appellants were not liable to pay service tax for the period prior to 01.07.2012.

For the period post 01.07.2012, the Tribunal found that the appellants' role as a business facilitator to a Gramin Bank was covered under an exemption notification, and thus, they were also not liable to pay service tax.

The Tribunal further clarified that even though there was an agreement stating that service tax was inclusive, since the services provided were exempted from payment of service tax, the appellants were not required to pay any service tax.

In conclusion, the impugned order demanding service tax was set aside, and all the appeals were allowed with consequential relief.

Note:
The judgment was delivered by HON'BLE MR. ASHOK JINDAL, MEMBER (JUDICIAL), and HON'BLE MR. K. ANPAZHAKAN, MEMBER (TECHNICAL).