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2009 (8) TMI 291 - AT - Service TaxManagement Consultant Service and Business Auxiliary Service - Prima facie, in respect of the services covered by Article 2.1 of the Agreement between the appellant and the Joint Venture Company, the appellant is already registered with the department as provider of Business Auxiliary Service with effect from 1-7-03 and are paying service tax under that category. Such payments of service tax are being accepted by the department as well. Prima fade the same services cannot be classified under any pre-existing entry of Section 65 of the Act, 1994 inasmuch as the definition of Management Consultant has not been shown to have undergone any change with effect from 1-7-03 with the introduction of Business Auxiliary Service. The appellant has made out a prima facie case against pre-deposit of the demand of service tax and penalty. Therefore, there will be waiver of pre-deposit and stay of recovery in respect of the amounts of service tax and penalty.
Issues:
Classification of services under "Management Consultant Service" for service tax liability. Interpretation of Section 65(53) of the Finance Act, 1994. Applicability of "Business Auxiliary Service" post 1-7-03. Comparison between "Management Consultancy" and "Business Auxiliary Service". Pre-deposit and stay of recovery of service tax and penalty. Analysis: 1. The issue at hand revolves around the classification of services provided by the appellant under the category of "Management Consultant Service" for the purpose of service tax liability. The learned Commissioner demanded service tax and imposed a penalty on the appellant based on this classification. The services rendered by the appellant to the Joint Venture Company were specified under Article 2.1 of the 'Administrative Services Agreement'. The appellant argued that post 1-7-03, they are registered as providers of "Business Auxiliary Services" and are paying service tax accordingly. The appellant contended that "Management Consultancy" and "Business Auxiliary Service" operate in mutually exclusive areas, and the services now classified as "Business Auxiliary Service" cannot be categorized as "Management Consultancy" for any period before 1-7-03. 2. The appellant's argument finds support in a judgment of the Hon'ble High Court of Bombay in the case of Indian National Shipowners Association. The High Court's decision emphasized the importance of distinct entries and the introduction of new taxable services. The Tribunal's decisions in Diebold Systems Pvt. Ltd. and Glaxo Smithkline Pharmaceuticals Ltd. were also cited to support the appellant's case. The Tribunal's ruling in Global Software Ltd. v. CCE highlighted the distinction between "Management Consultant" and "Commercial Training and Coaching Centre" as separate taxable services. 3. On the contrary, the learned SDR relied on the decision in RPG Enterprises Ltd. v. Commissioner of Central Excise, Mumbai-IV, where the principle of mutuality was deemed inapplicable to a similar case involving a Joint Venture Company. However, the appellant did not press the argument that services provided to the Joint Venture Company should not be taxable. The focus remained on the High Court's interpretation in the Indian National Ship Owners Association case. 4. The Tribunal found merit in the appellant's case, considering the High Court's judgment and previous Tribunal decisions. The appellant was registered for "Business Auxiliary Service" post 1-7-03, and the payments made under this category were accepted by the department. As the definition of "Management Consultant" remained unchanged post 1-7-03, the services in question could not be classified under any pre-existing entry of Section 65 of the Finance Act, 1994. Consequently, the Tribunal granted a waiver of pre-deposit and a stay of recovery for the service tax and penalty amounts.
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