2017 (6) TMI 1003 - AT - Service Tax

Amendment in notification - retrospective effect or prospective? - Management Consultancy Service - Manpower Recruitment Service - N/N. 59/98 - whether the services of Management Consultant and Manpower Recruitment Agency provided by appellants in their professional capacity during the disputed period is taxable or not? - Held that - the issue is settled by the decision of the Chennai Bench of the Tribunal in the case of M/s SB. Billimoria & Co, M/s. AF. Ferguson & Co Versus Commissioner of Service Tax, Chennai 2015 (4) TMI 217 - CESTAT CHENNAI , where it was held that A benefit available on a plain reading of the notification cannot be denied retrospectively by issuing a notification. The Explanation introduced under N/N. 15/2002-S.T., dated 01.08.2002, therefore, takes effect only from the date of its issue - demand set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
Whether services of Management Consultant and Manpower Recruitment Agency provided by appellants in their professional capacity during the disputed period are taxable.

Analysis:
The appellants, registered as Practicing Chartered Accountants, provided Management Consultant Service and Manpower Recruitment Agency Service, deemed taxable by the department. A show cause notice was issued for the period 16.10.1998 to 1.8.2002. Notification 59/98 exempted services provided by Practicing Chartered Accountants, excluding Management Consultancy Service and Manpower Recruitment Service. Later, Notification 15/2002 inserted an Explanation stating that services falling under other taxable services are not exempt. The department claimed the amendment had retrospective effect, demanding service tax for 1998-2002.

The respondent argued that Notification 15/2002 was applicable retrospectively, justifying the demand. The Tribunal referred to previous judgments, including Deloitte Haskins & Sells, to establish that services not mentioned in Notification 59/98 are exempt. The Tribunal noted that Management Consultancy Service was not covered in the notification, entitling the appellants to the benefit before 1.8.2002.

In the case of Deloitte Haskins & Sells, the Tribunal confirmed that services not listed in Notification 59/98 are not taxable until 1.8.2002. The Tribunal emphasized that the legislative intent cannot be read retrospectively into a notification, barring the demand for services provided before 1.8.2002. Following these precedents, the demand for service tax was deemed unjustified, and the appeal was allowed with any consequential relief.

In conclusion, the Tribunal ruled in favor of the appellants, holding that services of Management Consultant and Manpower Recruitment Agency provided by Practicing Chartered Accountants were not taxable before 1.8.2002, based on the interpretation of relevant notifications and previous judicial pronouncements.