2012 (10) TMI 372 - AT - Service Tax

Management Consultancy Services vs Franchisee services - Held that - Appellants are engaged in the manufacture of brand owners of Indian made foreign liquor and are getting the said branded alcoholic beverages manufactured from different contract bottling units on contracts basis is Franchisee service and not Management Consultancy Services - Appellants are entitled to unconditional dispensation with the pre-deposit of duty and penalty.

Summary

Issues:
1. Confirmation of service tax within the limitation period.
2. Applicability of service tax under different categories.
3. Granting unconditional stay on the ground of different categorization in the Show Cause Notice.

Analysis:

1. The Commissioner (Appeals) dropped a major part of the demand as barred by limitation but confirmed service tax of Rs. 91,86,110/- within the limitation period, along with imposing penalties on the applicant. The appellants, engaged in manufacturing branded alcoholic beverages through contract bottling units, had a demand confirmed for service tax under the category of 'Management Consultancy Services' for the period preceding the present appeal.

2. The Show Cause Notice proposed confirmation of service tax under the category of franchisee services, but the tax was confirmed under IPR services. The appellants argued for unconditional stay based on the discrepancy in categorization, citing a similar case where unconditional stay was granted to competitors facing identical circumstances. The Revenue agreed that the initial proposal was for franchisee services but contended that the appellants had ample opportunity to contest the confirmation under IPR during adjudication, having relied on the Board's Circular related to IPR services.

3. The Tribunal, considering the earlier decision in the appellant's case and a stay order by the Mumbai Bench, granted unconditional stay on the ground that confirming demand under a different category than proposed in the Show Cause Notice was not permissible. Citing precedent cases, the Tribunal ruled in favor of the appellants, allowing dispensation with the pre-deposit of duty and penalty. The decision was based on the principle that the categorization inconsistency warranted an unconditional stay, aligning with previous tribunal rulings.