9911796707
TMI Blog2014 (12) TMI 598X X X X Extracts X X X X X X X X Extracts X X X X ..... lants’ attempt to elucidate the meaning of Management Consultancy by reference to meaning of the word ‘Management’ is not really germane because the expression ‘Management Consultant’ and ‘Management Consultancy Service’ are clearly defined in the Finance Act 1994 itself and therefore one doesn’t have to, indeed one cannot, look beyond the statutory definition for the purpose of classification in this case. Regarding the appellants contention that the said services would be appropriately covered in the category of support services of business or commerce, or Business Consultancy Service, the same is not tenable because as per the definition of support service for business or commerce, the activities covered thereunder are essentially executionery in nature. - Decided against the assessee. Export of services or not - amounts paid by the ONGC to be treated as receipt in foreign currency or not - Held that:- The ratio of the judgment of Supreme Court in the case of JB Boda [1996 (10) TMI 70 - SUPREME Court] is that for treating such payments as payments received in foreign exchange, RBI’s nod should be there which is absent in the present case. It is pertinent to mention that on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s. Northstar Aerospace during the period 01.07.2003 to 19.11.2003 and 15.03.005 to 30.09.2005. (ii) The scope of services rendered by the appellants to M/s. Transocean and M/s. Tide Water, were listed in the agreement entered into by the appellant with these entities and are described in the table below:- S.NO. ACTIVITIES PERFORMED 1. Assist the company in obtaining work at acceptable rates; 2. Advise and assist the company on the commercial aspects of preparation of bids and subsequent contract negotiations; 3. Keep the Company advised on current developments in the territory which may affect its business and operations; 4. Upon request, advise the Company regarding securing Government licenses, permits and certificates as may be required with respect to its business and operations; 5. Upon request, advise the Company regarding obtaining visas and labour permits for entry into and departure from India of the Companys personnel in connection with any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but only to the extent such information can be obtained in a legal manner and from sources other than the competitors themselves; 16. Provide the Company expert advice concerning the following laws and regulations: a. Foreign Exchange Regulation Act b. Mines Act c. Labour Laws d. Industrial Disputes Act e. Oil Fields Regulation and Development Act f. Petroleum Natural Gas Act g. Income Tax Act h. Territorial Waters, Continental Shelf, Exclusive, Economic Zone and other Maritime Zones Act i. Customs Act and; 17. Advise the Company with respect to current economic and political developments in India. (iii) The appellants had also entered into Sales Representative agreements with M/s. Halicopter Asia (PTE) Ltd., M/s. Honeywell International Inc., M/s. Standard Aero Ltd., M/s. ST Aerospace Engineering (PTE) Ltd. and M/s. Northstar Aerospace. The service rendered under the said agreements was in connection with the promotion of sale of goods/services of the said foreign supplier in India. The Adjud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which related to the management of an organization. Therefore, even going by the finding given by the Ld. Commissioner that the Appellants had rendered consultancy to the Foreign Service Providers in connection with their business in India, such services would be liable to service tax only with effect from 01.06.2007 and not before that. (iv) Their service is more appropriately covered under Business Support Service which came into effect from 01.05.06, or under Business Consultancy Services which was incorporated with effect from 01.06.2007. (v) They also referred to the following judgments among others:- (a) Glaxo Smithkline Pharmaceuticals Ltd. Vs. CCE 2004(188) ELT-171 (Tri.-Mum.) (b) Commissioner of Central Excise Vadodara Vs. Arvind Narayan Prasad Nopary 2008 (11) STR 353 (Tri.-Ahm). (c) Board of Control for Cricket in India Vs.CST 2007-TIOL-684-CESTAT-MUM. (d) Telephone Cables Ltd. Vs. CCE 2007 (7) STR 657 (Tri.-Del) (e) Bharti Televentures Ltd. Vs. Commissioner of Central Excise Delhi-I 2013 (30) STR 148 (Tri.-Del.) (vi) So long as the consideration was received in convertible foreign currency, the service tax was exempt during the entire period b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s evident from the description of service rendered by the appellants they were clearly providing consultancy with regard to the various aspects of management and therefore it was covered under Management Consultancy Service . He said that the management consultant plans the work and not work the plan and the service rendered by the appellants was essentially in the nature of providing consultancy in relation to planning the work and not working the plan. He also referred to CBEC Circular No. 1/2001-ST (section 37B) dt. 27.06.2001 wherein the expression Management in Management Consultancy have been elucidated to stress the point that the impugned service fell in the category of Management Consultancy Service. 5. As regards the payment received directly from ONGC. Ld. AR said that the same having been received in Indian Rupees from an Indian Company cannot be called to have been received in foreign exchange. As regards the service rendered to M/s. Helicopter Asia et al, he conceded that as the payment was received in foreign exchange the CESTAT Larger Bench judgment in case of Paul Merchants Vs. CCE, Chandigarh 2013 (29) STR 257 (Tri.-Del) would be applicable. 6. We have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e clearly defined in the Finance Act 1994 itself and therefore one doesn t have to, indeed one cannot, look beyond the statutory definition for the purpose of classification in this case. It is well settled that for the interpretation of statutes one has to go by the definition of a term contained in the statute regardless of its dictionary or other meanings or its definitions in other statutes. The service which was the subject matter of M/s. Glaxo Smithkline Consumer Healthcare Vs. CC, Mumbai -II (supra) was essentially in regard to market development, marketing and sales and hence was not similar to the impugned service. The service involved in the case of Bharti Televentures (supra) was essentially liaisoning. Indeed, none of the other case laws cited by the appellants for pressing that the impugned service is not Managements Consultancy Service dealt with service of the nature described in para 2 above. 7. Regarding the appellants contention that the said services would be appropriately covered in the category of support services of business or commerce, or Business Consultancy Service, the same is not tenable because as per the definition of support service for business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payments received in foreign exchange in view of the Hon ble Supreme Court s judgment in case of J.B. Boda and Co. Pvt. Ltd. Vs. CBDT [1997] 223 ITR 271 (SC) and Hon ble Bombay High Court judgment in case of Indian Hume Pipe Co. Ltd. Vs. CBDT [1987] 165 ITR 537 (Bom.). The judgment in case of G. B. Boda was in connection of Income Tax Act and in that case the Reserve Bank of India (RBI) was kept in the loop. The Bombay High Court judgment in the case of India Hume Pipe (Supra) was also in relation to Income Tax Act and there too RBI had been kept in the loop. Thus, the ratio of these judgments particularly of the judgment of Supreme Court in the case of GB Boda (supra) is that for treating such payments as payments received in foreign exchange, RBI s nod should be there which is absent in the present case. It is pertinent to mention that once the RBI is taken in the loop, such transactions will not go unnoticed for the purpose of the relevant data bases of Indias international trade and foreign exchange transactions and will also not remain under the radar of the laws relating thereto. Thus, the impugned payments made by ONGC to the appellants do not merit to be treated as paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... took to arrive at their claimed bona fide belief; whether they sought any legal advice or whether they consulted some professional/trade associations or ascertained the industry practice. Admittedly, if the assessee fails to take registration or fails to pay service tax under a bonafide belief that they are not liable to service tax, allegation of suppression/willful misstatement can t be sustained. But mere uttering of the words bonafide belief does not even make it a belief, leave alone bonafide belief. For example, an individual having an annual income of several lakhs of Rupees, when caught can t get away by simply claiming that he was under bonafide or reasonable belief that he was not liable to pay income tax. Bonafide or reasonable belief has to be an informed belief of a reasonable person. For a service provider of this stature, something positive has to be shown to demonstrate that they had made reasonable efforts or had taken reasonable steps to ascertain legal position with regard to taxability of their impugned activities for the purpose of forming their purported reasonable belief. Mere presumption of non-taxability can never be equated to reasonable belief in tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Order-in-Original that they did not produce any documentary evidence to question the computation made by Revenue. They have not disputed this observation of the adjudicating authority. Therefore this plea at the appellate stage in the absence of any valid ground as to why they could not produce the documentary evidence before the adjudicating authority can not be entertained. 14. In the light of para 11, the impugned service tax on Business Auxiliary Service amounting to ₹ 34,90,671/- is not sustainable. Similarly impugned service tax demand relating to Management Consultancy Service for which payment was received in foreign exchange (which does not include the payment received from ONGC) amounting ₹ 1,08,32,547/-also does not survive. Resultantly, only demand of ₹ 2,07,96,620/-is sustainable alongwith interest and mandatory equal penalty. 15. In the light of the foregoing the appeal is partially allowed inasmuch as impugned order is modified only to the extent that the demand confirmed is reduced to ₹ 2,07,96,620/- penalty under Section 78 ibid is reduced to ₹ 2,07,96,620/- penalty under Section 77 is reduced to ₹ 1000/- and penalty und ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
