2010 (2) TMI 368 - AT - Service Tax

Managed Services and Consulting Integration Service- The service tax liability has arisen on the ground that the appellant has rendered services under category of Managed Services and Consulting Integration Service . That the issue is regarding whether the services provided by the appellant fall under category of Management Consultancy Services . Held that-the appellant has deposited an amount of Rs. 18.12 crores for the period from 1-5-2006 to 31-3-2007 under the category of Business Support Service . Thus it consider that this amount as enough deposit for the disposal of the appeal. Accordingly the application for waiver of pre-deposit of the balance amount involved is allowed and recovery thereof stayed till the disposal of the appeal.

Summary

Issues:
1. Waiver of pre-deposit of service tax, interest, and penalties.
2. Classification of services under 'Managed Services' and 'Consulting Integration Service' as 'Management Consultancy Services'.
3. Interpretation of the definition of 'Information Technology service' and 'Management Consultancy Service'.

Analysis:
The judgment by the Appellate Tribunal CESTAT, Bangalore involved the issue of waiver of pre-deposit of a substantial amount including service tax, interest, and penalties. The appellant sought the waiver, challenging the service tax demand related to services provided under 'Managed Services' and 'Consulting Integration Service'. The appellant argued that the services should not be classified under 'Management Consultancy Services' but under 'Information Technology Software Services' post a specific date. Referring to previous decisions, the appellant contended that the services did not fall under 'Management Consultancy Service'.

The Tribunal considered the submissions of both parties and focused on determining whether the services provided indeed fell under the category of 'Management Consultancy Services'. The appellant emphasized that the change in the definition of 'Information Technology service' post a certain date meant they should be taxed under 'Information Technology Software Service' and not 'Management Consultancy Service'. The Tribunal acknowledged the appellant's deposit of a significant amount under 'Business Support Service' for a specific period, considering it sufficient for the appeal's disposal. Consequently, the Tribunal allowed the waiver of pre-deposit for the remaining amount, staying the recovery until the appeal's final disposal.

In conclusion, the judgment delved into the classification of services provided by the appellant, scrutinizing whether they fit under 'Management Consultancy Services' or 'Information Technology Software Services'. The Tribunal's decision to allow the waiver of pre-deposit for the balance amount hinged on the interpretation of these service categories and the appellant's compliance with prior deposits. The detailed analysis and application of relevant legal precedents underscored the complexity of determining the appropriate tax treatment for the services in question, shaping the outcome of the case.