2018 (2) TMI 831 - AT - Service Tax

Validity of SCN - Classification of services - appellants had provided certain services to various organizations on behalf of the main consultants, with whom the appellant had entered into the agreement for providing such service - whether the services provided by the appellant should be classifiable under Management Consultancy Service or Business Auxiliary Service? - Held that - it transpires that in case of Management or Business Consultant, there must be involvement two persons in the contract, one is the service provider and the other is the service recipient. On the contrary, in the case of Business Auxiliary Service , the said service involves more than two persons in order to perform such service. In the case in hand, the appellant claimed that it had provided services to different parties, mostly Government Organizations, parties situated within the country or on behalf of the main consultant. The Department has also not countered the submission of the appellant. Thus, it is evident that the appellant has provided this service to the third parties on behalf of the main consultant - the services provided by the appellant should merit classification under Business Auxiliary Service - cannot taxed under Management Consultancy Service - Demand cannot sustain on the ground of wrong classification of the service Appeal allowed - decided in favor of appellant.

Summary

Issues:
Classification of services under "Management Consultancy Service" or "Business Auxiliary Service"

Analysis:
The appeal was against an order passed by the Commissioner (Appeals), Service Tax, New Delhi, confirming a service tax demand against the appellant for providing services to various organizations on behalf of main consultants. The appellant contended that the services provided should be classified under "Business Auxiliary Service" instead of "Management Consultancy Service" as wrongly classified by the authorities.

The Tribunal considered the definitions of both "Business Auxiliary Service" and "Management or Business Consultant" under the Finance Act, 1994. It noted that for "Management or Business Consultant" services, there must be involvement of two persons in the contract, whereas "Business Auxiliary Service" involves more than two persons. The appellant claimed to have provided services to third parties on behalf of the main consultant, which the Department did not counter. Consequently, the Tribunal held that the services provided by the appellant should be classified under "Business Auxiliary Service" based on the facts presented.

Therefore, the impugned order was set aside, and the appeal was allowed in favor of the appellant. The Tribunal's decision was based on the proper classification of services under the relevant categories as per the definitions provided in the Finance Act, 1994.