2017 (10) TMI 1189 - AT - Service Tax

Management Consultant Service - non-payment of service tax - Held that - it is difficult to appreciate that preparation of statistical report by the appellant could be construed as providing any service in connection with the management of the company, hence, would come under the scope of aforesaid definition of management consultant. Since, on merit the levy of service tax on the services provided by the Appellant cannot be sustainable, therefore, ancillary issues, namely, imposition of penalty, limitation etc., become move of academic, accordingly not dealt with - appeal allowed.

Summary

Issues:
Appeal against OIA No.72/2008(Ahd-III)/CE/KCG/Commr(A) dated 11.08.2008 - Alleged failure to pay service tax for 'Management Consultant Service' - Confirmation of demand with interest and penalty - Interpretation of 'Management Consultant' under the Finance Act, 1994.

Analysis:

1. Facts of the Case:
The appeal was filed against the order passed by the Commissioner (Appeals) of Central Excise, Ahmedabad-III, alleging non-payment of service tax amounting to ?1,44,187 for 'Management Consultant Service' provided to a joint venture company. The appellant, a Government of Gujarat undertaking, entered into a Joint Operating Agreement with M/s Niko Resources, Canada for oil field exploration and production. The issue arose when M/s Niko Resources assigned the preparation of statistical reports to the appellant instead of fulfilling this obligation themselves.

2. Contentions of the Appellant:
The appellant argued that the preparation of statistical reports, which was originally M/s Niko Resources' responsibility under the agreement, should not be considered as 'Management Consultancy Service' as defined under the Finance Act, 1994. The appellant contended that providing this service did not fall within the scope of management consultancy services, as per the statutory definition.

3. Revenue's Position:
The Revenue, represented by the Ld. AR, supported the findings of the Commissioner (Appeals) regarding the levy of service tax on the appellant for the services provided.

4. Interpretation of 'Management Consultant':
The Tribunal analyzed the definition of 'Management Consultant' under the Finance Act, 1994, which includes any person engaged in providing services related to the management of an organization. The Act specifies that management consultancy involves advice, consultancy, or technical assistance in various aspects of organizational management.

5. Decision and Rationale:
After examining the facts and legal provisions, the Tribunal concluded that the preparation of statistical reports by the appellant did not fall under the definition of 'Management Consultant Service' as per the Finance Act, 1994. The Tribunal found that the appellant's role in preparing these reports did not constitute providing services related to the management of the joint venture company. Therefore, the levy of service tax on the appellant was deemed unsustainable. Consequently, the impugned order confirming the demand with interest and penalty was set aside, and the appeal was allowed with any consequential relief as per the law.

This detailed analysis highlights the key legal arguments, statutory interpretations, and the Tribunal's decision in the case concerning the levy of service tax on the appellant for the services provided to the joint venture company.