2018 (9) TMI 1213 - AT - Service Tax

Classification of Services - certain services provided by Chartered Accountant - Management Consultancy Services or not? - N/N. 59/1993-ST - Time limitation - Held that - Management and consultancy can be provided by any person and by being a chartered accountant one does not go out of the purview of the definition - In the instant case, the services provided by appellant have been described by the appellant themselves as preparation of project feasibility report including financial feasibility, profile of the concern, etc. It is seen that the above description does not fall under the category described in the clarification of the Ministry dated 20/08/1999 - Preparation of project report would squarely fall under the description relating to conceptualizing devising of any working system of any organization‟ and thus would squarely fall under the definition of Management of Consultancy firm - the services provided by the appellant are indeed covered under the definition of Management Consultancy Services. Time Limitation - Held that - Even if appellant believed that the said services were exempted or non-taxable, it was necessary for him to declare the same in the ST-3 returns which they have failed to. Moreover, Chartered Accountants are experts in the field of Service Tax and the issue involved in the instant case is not one wherein anybody can have any doubt - invocation of extended period of limitation is also upheld. Appeal dismissed - decided against appellant.

Summary

Issues:
Confirmation of demand under Management Consultancy Services; Interpretation of exemption notification for Chartered Accountants; Nature of services provided by the appellant; Applicability of extended period of limitation.

Confirmation of demand under Management Consultancy Services:
The appeal was filed against the confirmation of demand under Management Consultancy Services. The appellant argued that the services provided by Chartered Accountants were exempted under notification 59/1993-ST, which was later amended in 2002. The amendment added an explanation stating that services provided by Chartered Accountants falling under taxable services as defined in the Act would not be exempt. The demand in this case was for the period August 2002 to March 2006, after the exemption notification was withdrawn in 2006. The appellant contended that their services were not in the nature of Management Consultancy Services but fell under a different category as clarified by the Ministry in 1999.

Interpretation of exemption notification for Chartered Accountants:
The appellant argued that the services provided were not in the nature of Management Consultancy Services but were covered under a different category as per the Ministry's clarification in 1999. However, the Assistant Commissioner contended that the services were advisory in nature and fell under Management Consultancy Services. He also argued that the extended period of limitation was applicable due to the expertise of Chartered Accountants in Service Tax matters and the non-disclosure of income under this head in the ST-3 return amounted to suppression of facts.

Nature of services provided by the appellant:
The Tribunal analyzed the definition of "Management or Business Consultant" under the Finance Act, 1994, which includes providing services related to the management of any organization or business. The appellant's services involved preparing project feasibility reports, financial feasibility, and profiles of concerns, which were considered to fall under the definition of Management Consultancy Services. The Tribunal found that the services provided by the appellant were indeed covered under the definition of Management Consultancy Services based on the description of the services provided.

Applicability of extended period of limitation:
The Tribunal upheld the invocation of the extended period of limitation, stating that even if the appellant believed the services were exempted or non-taxable, they should have declared the same in the ST-3 returns, which they failed to do. The expertise of Chartered Accountants in Service Tax matters was considered, and the issue involved was not one where doubts could arise. Therefore, the Tribunal dismissed the appeal based on the applicability of the extended period of limitation.

This judgment highlights the importance of correctly categorizing services under relevant notifications, the interpretation of statutory definitions, and the obligation to disclose information accurately in tax returns to avoid issues related to limitations and exemptions.