2013 (9) TMI 514 - AT - Service Tax

Management Consultancy Services u/s 65 (65) - Applicant was a proprietorship firm engaged in Practising Chartered Accountant services department imposed the tax along with interest and penalties - Held that - Services rendered by a Practicing Chartered Accountant or a Practicing Cost accountant in connection with the management of any organization in any manner shall be deemed to be taxable service under the category of Management Consultant or Manpower Recruitment Services prima facie the services rendered would come within the purview of Management Consultant Services From the nature of the services it was seen that applicant were rendering services to client in the nature of Advice on macro political and economic input including national and Global economics and political situation for decision making and guidance needed for policy making - Service was in the nature of advice on national and international policies, social and political issues, promoter family interface and harmony and enabling identification of talent in India, especially in rural areas. Waiver of pre deposit prima facie case is against the assessee - stay granted partly.

Issues:
1. Change of respondent's name in the cause title.
2. Demand of service tax for "Management Consultancy Services".
3. Interpretation of the definition of "Management Consultant Services".
4. Applicability of Exemption Notification No. 59/98-ST.
5. Limitation period for the demand of tax.
6. Prima facie assessment of services provided by the applicant.
7. Pre-deposit requirement for appeal hearing.

Change of Respondent's Name:
The application for changing the respondent's name in the cause title from "Commissioner of Central Excise, Chennai-III" to "Commissioner of Service Tax" is allowed by the tribunal.

Demand of Service Tax for "Management Consultancy Services":
The applicant, a proprietorship firm offering Chartered Accountant services, faces a service tax demand of Rs. 90,83,91,091 for the period October 2003 to March 2006 under the category of "Management Consultancy Services." The Commissioner upheld the tax demand, along with interest and penalties.

Interpretation of "Management Consultant Services":
The advocate for the applicant argues that the services provided do not fall under the definition of "Management Consultant Services" as per Section 65(65) of the Finance Act 1994. The advocate emphasizes that the services rendered are legal and economic advisory, potentially qualifying for exemption under Notification No. 59/98-ST, and asserts that the demand is time-barred.

Applicability of Exemption Notification:
The Authorized Representative for Revenue supports the Commissioner's findings, pointing out that most services align with "Management Consultant Services" as per relevant notifications.

Limitation Period for Tax Demand:
The tribunal notes an explanation in Notification No. 59/98-ST, inserted by an amendment in 2002, which clarifies the taxability of services provided by practicing chartered accountants in connection with management activities.

Prima Facie Assessment of Services:
While some services may be considered purely legal, services provided to specific clients like BGH Exim Ltd. and Essel Group appear to fall under "Management Consultant Services." The tribunal directs the applicant to deposit a specified amount within a set timeframe for appeal consideration.

Pre-deposit Requirement for Appeal Hearing:
The tribunal orders the applicant to deposit Rs. 15,00,000 within four weeks and report compliance by a specified date. Upon this deposit, the pre-deposit of the remaining tax, interest, and penalties is waived, with recovery stayed during the appeal process.

This detailed analysis of the judgment covers the issues raised, arguments presented, and the tribunal's decision regarding each aspect of the case.

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