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TMI Blog2022 (8) TMI 541X X X X Extracts X X X X X X X X Extracts X X X X ..... lm of thinking and giving ideas and not executing the work or performing the task himself. In the instant case M/s Cotunace have only mediated between the organisations in settling the financial dispute. As submitted by the learned Chartered Accountant for the appellant the role of M/s Cotunace was to arrive at a settlement of the pending dispute between the appellant and GCT. M/s Cotunace have not rendered any advice for running the organisation of the appellants in an effective manner. Their role was mediation /arbitration in resolving the dispute. They have only performed the work of mediator/arbitrator in resolving the dispute between the appellant and M/s GCT. Actual work performed cannot be equated with advice. Therefore, M/s Cotunace did not render any management consultancy service to the appellant. The services rendered by M/s Cotunace do not fall under management consultancy service in terms of Section 65 (65) of Finance Act, 1994 - the appellants are not liable to pay any service tax on reverse mechanism on the services rendered by M/s Contunace to the appellants. Any tax paid this regards is liable to be refunded, if otherwise in order. Appeal allowed - decided in favor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, or regulation, or administration or control or superintendence". In the aforesaid judgment, it has also been observed that in the context of business, "Manage" means "to control, to guide, to administer, to conduct or direct affairs", carry on "business". 3.2 Further, the scope of 'management consultancy services' was examined by the Central Board of Excise and Customs (CBEC) in consultation with the Indian Institute of Management, Ahmadabad and the opinion obtained was communicated vide Board's Circular No. 1/1/2001-S.T., dated June 27, 2001 which reads as follows : "7. In this regard, the Board had consulted the Indian Institute of Management, Ahmadabad for obtaining an expert opinion on the subject matter. They have opined that the term "management" is generally understood to mean running the affair of an organisation in an organised and systematic manner. To be able to do this efficiently and effectively, management typically involves carrying out a host of activities, functions and tasks and at different levels. Thus management encompasses both strategic and operational level functioning and would include tasks such as planning, organising, staffing, directing, controlli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity interests. The goal of mediation is to find a mutually acceptable solution that adequately and legitimately satisfies the needs, desires and interests of the parties. 1.8 the mediator employs certain specialized communication skills and negotiation techniques to facilitate a productive interaction between the parties so that they are able to overcome negotiation impasses and find mutually acceptable solutions." 3.7 In line with the process of mediation summarized herein-above, M/s cotuance enabled the parties, viz. the Appellant and GCT to find a solution to the dispute relating to the outstanding dues. M/s cotuance has not in any circumstance provided any advice or consultancy or assistance with respect to management of the financial aspects of the Appellant Company. This factual scenario is evident from the agreement between the Appellant and the M/s Cotunace as well as from the Order of the BIFR intending to settle the outstanding dues between the parties. 3.8 The Appellant submits that in the absence of any form of guidance or advice or assistance with respect to management of the finances of the Appellant, the activity by the Mediator, which is executionary in nature, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tri) 6. Commissioner Vs Sterlite Optical Technologies Ltd, 2016 (41) STR J305 (Guj) affirming 2009 (13) STR 582 (Tri) 7. Glaxo Smithkline Pharmanceuticlas Ltd., Vs CCE 2005 (188) ELT 171 (Tri-Mumbai) 8. CCE, Chennai Vs Futura Polyesters Ltd, 2011 (24) STR 751 (Tri) 9. Nirulas Corner House Pvt Ltd, Vs Commissioner 2009 (14) STR 131 (Tri-Del) 5. The learned Authorised Representative for the Department submits that the definition of "Management Consultants" is vast and encompasses the activities undertaken by M/s Cotunace to the appellants. He reiterates the findings of the impugned order and submits that the Department has rightly rejected the refund claim on merits as well as unjust enrichment. He relies on the Tribunal's decision in the case of S. Gurumurthy Vs. Commissioner of Central Excise and Service Tax, Chennai III reported in 2019 (22) GSTL 55 (Tri-Chennai). He submits that the Circular issued in 2001, will not be of any help to the appellants as it was issued in the period before the amendment to the definition of Management Consultants. 6. Heard both sides and perused the case records. 7. We find that in terms of Section 65(105)(r) of the Finance Act, 1994, taxa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at international council of management consulting institute defines "Management Consulting" and "Management Consultant" as below:- Management Consulting: The rendering of independent advice and assistance about the process of management to the clients with management responsibilities. Management Consultants: An individual who provides independent advice and assistance about the process of management to the clients with management responsibilities. Apex Court in the case of R. Dalmia Vs CIT (1977) 106 ITR 895 (SC) observed as follows:- "In the context of business, "manage" means to "control, to guide, to administer, to conduct or direct affairs; carry business" (shorter Oxford Dictionary, Webster's New World Dictionary), "management" includes the act of managing by direction, or regulation, or administration or control or superintendence." 10. From the above it can be seen that the work of the consultant is to advise the top management in order to help them in running the organisation in more efficient and effective manner after studying the peculiar features of the existing organisation. Thus, the work of the consultant falls in the realm of thinking and giving ideas and no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... construed as 'service', let alone fitted within one of the taxable services enumerated in section 65(105) of Finance Act, 1994. The mandatory fees for initiation of such proceedings, as well as charges paid for mediation as a prelude arbitration, cannot be any stretch, be rendered liable to tax. We also find that the definition of 'management or business consultant' in section 65(65) of Finance Act, 1994 is in relation to management of any organisation of business; the enumeration therein demonstrates, abundantly, the various segments of management that are intended to be covered and the advice obtained from M/s Agri-Waste Technologies does not appear to fit in with such activity. The confirmation of demands in the order impugned before us in the first appeal on these two counts fails to find sustenance." 12. We find that Tribunal in the case of Basti Sugar Mills Co. Ltd. CCE (2007) STR 431 (T) has held that the activity of a mediator cannot fall in to the category of business consultant service. This case was upheld by Supreme Court 2012 (25) STR 3154 (SC). The Tribunal observed that 6. The definition of management consultant under the taxing statute may be noted:- "Managemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itself clarifies that the activity should be done by a management consultant and it should be connection with the management of any organization in any manner. The appellant has not carried out any activity of management consultant in connection with the management of any organization in any manner. The Commissioner has relied on the Board's Circular which clarifies the activity of management consultant, who renders services in an advisory capacity in respect of merger and acquisition transaction. Such an activity has not been done by the appellant. Even Para of the clarificatory Circular states that such an activity of merger and acquisition transaction are not to be treated as management Consultant. They have to be treated only under Banking and Other Financial Services. The Commissioner not read the Circular fully. There is a misapplication of the Circular. The appellants are not Management Consultant by rely playing a role in acquiring shares for a particular person. The impugned order is not legal and proper. The same is (aside and the appeal is allowed with consequential relief, if any. 13.1 Similarly, Tribunal in the case of Sundaram Finance Ltd. 2007 (7) S.T.R. 55 (Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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