2014 (1) TMI 1253 - AT - Service Tax

Demand of service tax - Business Management Consultancy Services - Held that - what is envisaged from a consultant is advisory service and not the actual performance of the management function. In the present case, the appellant was in-charge of the operation of the factory and thus was performing the management function - where the agreement conferred operational autonomy and responsibility on the contracted party, the relationship is not one of consultancy - Following decision of Basti Sugar Mills Co Ltd vs CCE, Allahaba 2007 (4) TMI 25 - CESTAT,NEW DELHI - Decided in favour of assessee.

Summary

Issues:
1. Confirmation of demand for service tax and education cess on the appellant for providing Business Management Consultancy Services.

Analysis:
The appellant challenged the demand of service tax and education cess imposed by the Commissioner (Appeals) for providing Business Management Consultancy Services. The appellant contended that their entire business was taken over by another entity as per an agreement, and therefore, they did not provide any technical assistance or consultancy services. The appellant relied on a Tribunal decision in a similar case involving Basti Sugar Mills, where it was held that consultancy services do not apply when the operation of the factory is taken over. The Tribunal noted that the definition of a management consultant involves providing advisory services, not actual management functions. In this case, the appellant was in charge of the factory operation, indicating a management role rather than consultancy. The Tribunal referred to a previous decision involving Rolls Royce Industries Power (I) Ltd. to emphasize the distinction between a manager and a management consultant. The Tribunal found that the demand for Management Consultancy Services was not sustainable based on the facts presented.

The Tribunal also highlighted that the Revenue's appeal against the decision was dismissed by the Supreme Court, further supporting the Tribunal's findings. The Tribunal concluded that the appellant's situation aligned with the principles established in the previous decisions, and therefore allowed the appeal, setting aside the impugned order.