2015 (1) TMI 549 - AT - Service Tax

Management consultancy service or merely reimbursement of expenditure - providing General support services, Operational services, Personal services and Secretarial services - Held that - clauses of the Agreement that reimbursement is being made by M/s. Centak Chemicals for use of the facilities provided by the appellant. The income received from M/s. Centak Chemicals is reflected in the balance sheet of Century Enka. We have considered the definition of management consultancy service and management consultant. As per Section 65(65), Management Consultant means any person who is engaged in providing any service, either directly or indirectly, in connection with the management of any organisation or business in any manner and includes any person who renders any advice, consultancy or technical assistance, in relation to financial management, human resources management, marketing management, production management, logistics management, procurement and management of information technology resources or other similar areas of management . No services are provided by the appellant in connection with the management of M/s. Centak Chemicals Ltd. They are not rendering any advice or consultancy to M/s. Centak Chemicals Ltd. The very nomenclature of the service management consultancy indicates that it has nothing to do with provisions of facilities such as water, effluent treatment, etc. the expenditure of which is all reimbursed to the appellant. - Decided in favour of assessee.

Summary

Issues:
1. Appeal against service tax demand confirmation by Commissioner (Appeals).
2. Whether services provided fall within the scope of management consultancy service.
3. Interpretation of agreements for provision of services.
4. Reimbursement of costs for services provided.

Analysis:

1. The appellant, M/s. Konkan Synthetic Fibres, appealed against the Commissioner (Appeals) order confirming a service tax demand of Rs. 9,15,892 along with interest and penalties under Sections 76, 77 & 78 of the Finance Act, 1994.

2. The dispute revolved around services provided by M/s. Century Enka Ltd. to M/s. Centak Chemicals Ltd. The Revenue argued that these services, including general support, operational, personal, and secretarial services, fell under management consultancy service, thus attracting service tax liability.

3. The appellant's counsel argued that the services provided were not covered under management consultancy. They highlighted specific amounts charged for each facility provided, emphasizing the absence of a client-principal relationship. The appellant relied on case laws and a CESTAT judgment to support their position.

4. The Revenue contended that the agreements between the parties indicated coordination and consultation for efficient facility use, falling under the broad definition of management consultancy services. They emphasized the wide scope of services related to organizational management under the definition of management consultancy.

5. The Tribunal examined the agreements and services provided, noting the reimbursement of costs by M/s. Centak Chemicals to M/s. Century Enka for the facilities used. The Tribunal referred to the definition of a management consultant and concluded that the services provided did not involve management of M/s. Centak Chemicals. They found no advice or consultancy provided, supporting the appellant's argument that the services were not management consultancy.

6. Ultimately, the Tribunal set aside the Commissioner (Appeals) order, allowing the appeal in favor of the appellant. The judgment highlighted the distinction between management consultancy services and the specific facilities provided by the appellant, emphasizing the lack of management-related services in the latter.