2014 (11) TMI 312 - AT - Service Tax

Waiver of pre-deposit Classification of service Legal consultancy service or Management consultancy service Held that - It was for the department to establish that the payment made was for service of management consultancy to rebut evidence shown by appellant Merely because there is no evidence to show that services received are from the Chartered Accountants nor there is any evidence to show that payments made by appellants are towards reimbursement of Chartered Accountant services per se not sufficient to sustain classification under management consultancy just because IBM US has issued invoice and there is no evidence to show that it is actually reimbursement, it has been held that this amounts to management consultancy service. We are not able to appreciate at this prima facie stage. In view of the above, the demand for service tax under the category of management consultancy service, in our opinion, prima facie is not sustainable. In the absence of any evidence to show that the foreign service provider was licensed by Telegraphic Authority of India, in terms of precedent decisions on this issue, levy of service tax cannot be sustained - appellant has been able to make out a prima facie case except for ₹ 67,228/-. Accordingly, the appellant is directed to deposit an amount of ₹ 1 lakh within eight weeks - Partial stay granted.

Summary

Issues:
1. Dispute regarding service tax liability for legal consultancy and Chartered Accountant services.
2. Confirmation of demand based on invoices and lack of evidence for services received.
3. Prima facie disagreement with findings on management consultancy service and manpower supply.
4. Absence of evidence for licensed foreign service provider in telephone communication service.
5. Application of wrong rate of duty leading to a demand of Rs. 67,228.

Analysis:

1. The appellant, a private limited company, contested the service tax liability for legal consultancy and Chartered Accountant services. The demand was upheld due to the perceived receipt of management consultancy services alongside a lack of evidence supporting the claimed services.

2. The Commissioner's analysis focused on the invoices as primary evidence for taxable services. The invoices from the providers did not align with the appellant's claims, leading to the confirmation of demand for services like legal consultancy and Chartered Accountant services.

3. The Tribunal scrutinized the grounds for confirming the demand, particularly regarding management consultancy and manpower supply. Disagreement arose over the burden of proof, with the Tribunal emphasizing the necessity for contrary evidence to support the Department's claims.

4. Concerning telephone communication services, the absence of evidence indicating licensing by the Telegraphic Authority of India rendered the levy of service tax unsustainable, aligning with precedent decisions on the matter.

5. An error in the application of the duty rate resulted in a demand of Rs. 67,228. The appellant acknowledged this discrepancy and offered to deposit Rs. 1 lakh towards the demand. The Tribunal directed the deposit and waived the predeposit requirement for the remaining dues, staying recovery for 180 days.

Overall, the judgment delves into the intricacies of service tax liability, emphasizing the importance of substantiating claims with concrete evidence and addressing discrepancies in duty calculations. The Tribunal's detailed analysis highlights the need for clarity and accuracy in tax assessments to ensure fair and just outcomes in such legal disputes.