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TMI Blog2023 (8) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... order also has not given any finding regarding the invocation of extended period of limitation in this case - In this case the Appellant has filed returns regularly and disclosed all information to the department. Thus, the extended period of limitation is not invocable in this case. Consulting fee (other than Management consulting) - HELD THAT:- To levy of Service tax under Management Consultancy service as defined in Section 65(105)(r) read with Section 65(65) of the Act , the following conditions must be satisfied:- (i) Any service either directly or indirectly in connection with the management of any organization in any manner would be a management consultancy service; (ii) It includes rendering of any advice, consultancy, or technical assistance relating to conceptualizing, devising, development, modification, rectification or up gradation of any working system of any organization; (iii) Such service has to be provided by the service provider to a client. In the present case, none of the above criteria are satisfied in either of the activities undertaken by the Appellant during the period of dispute. The impugned order also has not given any finding as to how the Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommissioner (Appeal) upheld the demands confirmed in the said order vide O-i-A dated 04.12.2009, along with interest and penalty. Aggrieved against this impugned order, the Appellant has filed the present appeal. 2. In their Grounds of appeal, the Appellant made the following submissions: (i) They provide a comprehensive range of services such as data collection and analysis, manpower mobilization, liaison, training supervision, management consulting, software development etc. Apart from above, they provide services under a consortium arrangement in the capacity of sub-contractor. (ii) The Notice in this case was issued solely based on the audit objection raised by the AG (Orissa) during verification of Income Tax Returns, filed by them for the aforesaid period. The Notice neither states the date of scrutiny of such Income tax returns by the AG (Orissa) nor provides a copy the audit report to them. Purely on the basis of the said audit objection and without causing any independent enquiry to ascertain the correctness of the alleged short payment, the Notice was issued. (iii) The entire demand was barred by limitation. For the Financial Years 2001-02 to 2004-05, the dema ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gned Order has traversed beyond the Show Cause Notice in as much as it invoked extended period for the entire period of dispute, whereas the SCN had not even alleged willful misstatement or suppression of facts with an intent to evade payment of tax for the FY 2001-05. Accordingly, the demands confirmed in the impugned order is liable to be set aside. (ix) The demand is unsustainable on merits. The services rendered in the field of deployment of staff, software development, repair maintenance and public relation etc., cannot be taxed under the category of management consultancy services. Deployment of mobile team, software development, repair and maintenance, and providing public relation service etc. does not come within the ambit and scope of management consultancy service during the material period. (x) Section 65(65) of the Act as applicable during the period in dispute provides that: Management or business Consultant means any person who is engaged in providing any service, either directly or indirectly, in connection with the management of any organisation in any manner and includes any person who renders any advice, consultancy or technical assistance, relati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the capacity of sub-consultant are not liable to be taxed in the hands of the Appellant. The services rendered by the Appellant in the capacity of sub-contractor to principal contractors i.e., Adam Smith Institute, Bhubaneswar, Administrative Reforms Public Grievances, Price Water House Cooper (P) Ltd., European Union, BASIX OERC etc., during the period under dispute, cannot be subjected to levy of Service tax in the hands of the Appellant in terms of the legal provisions existed at the material time. The aforesaid services cannot be considered to have been provided to a client in as much as the same have been provided to the main contractor engaging the Appellant as a sub-contractor. Thus, the said service provided by the Appellant is outside the ambit of Section 65(105)(r) of the Act. In support of this contention they relied on the decision of the Tribunal in the case of Indfos Industries Ltd. v. Commissioner 2012 (26) STR 129 (Tri.-Del)as affirmed in 2015 (40) S.T.R. 220 (All.). (xvi) The expenditures incurred during execution of job and reimbursed by the customers, is not to be treated as fees and made excisable to levy of Service tax. The reimbursements received by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contravention with intention to evade the payment of Excise duty. Not only does it not give any such particulars, it does not even make a bare allegation. 3 . This Court has held that the party to whom a show cause notice of this kind is issued must be made aware of the allegation against it. This is a requirement of natural justice. Unless the assessee is put to such notice, he has no opportunity to meet the case against him. This is all the more so when a larger period of limitation can be invoked on a variety of grounds. Which ground is alleged against the assessee must be made known to him, and there is no scope for assuming that the ground is implicit in the issuance of the show cause notice. [See Collector of Central Excise v. H.M.M. Limited, 1995 (76) E.L.T. 497 and Raj Bahadur Narayan Singh Sugar Mills Limited v. Union of India, 1996 (88) E.L.T. 24]. 4. The appeal is allowed and the order of the Tribunal under appeal is set aside. 8. In the case of Collector v. HMM Ltd. 1995 (76) ELT 497 (SC), the Hon ble Supreme Court has held as under: 2. The assessee contended before the Additional Collector of Central Excise that the show cause notice was time barred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere non-declaration of the waste/byproduct in their classification list cannot establish any wilful withholding of vital information for the purpose of evasion of excise duty due on the said product. There could be, counsel contended, bona fide belief on the part of the assessee that the said waste or byproduct did not attract excise duty and hence it may not have been included in their classification list. But that per se cannot go to prove that there was the intention to evade payment of duty or that the assessee was guilty of fraud, collusion, mis-conduct or suppression to attract the proviso to Section 11A(1) of the Act. There is considerable force in this contention. If the Department proposes to invoke the proviso to Section 11A(1), the show cause notice must put the assessee to notice which of the various commissions or omissions stated in the proviso is committed to extend the period from six months to 5 years. Unless the assessee is put to notice, the assessee would have no opportunity to meet the case of the department. The defaults enumerated in the proviso to the said sub-section are more than one and if the excise department places reliance on the proviso it must be sp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 32/-. For ease of reference, the same is reproduced hereinbelow: Sl. No. Description 2000-01 2001-02 2002-03 2003-04 2004-05 1. Consulting fee (other than Management consulting) 12,13,560 44,40,000 13,75,991 24,000 5,67,322 2. Reimbursable expense 1,87,500 24,24,717 1,35,000 9,14,311 3,17,242 3. Sub-contract 2,10,000 2,52,000 10,49,478 66,29,939 20,94,636 4. Repair and maintenance 2,83,136 - - - - 5. Payment not received from client - - 5,20,000 - - 6. Software development ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve that the impugned order has not brought in any evidence to substantiate the allegation that the reimbursements received were towards rendering of any taxable service rendered by the Appellants to their clients. In the absence of any such evidence, we hold that the demand on this count is not sustainable. (iii) Sub-contract Rs. 20,94,636 14. The Appellant submitted that the services rendered by them in the capacity of sub-contractor to principal contractors i.e., Adam Smith Institute, Bhubaneswar, Administrative Reforms Public Grievances, Price Water House Cooper (P) Ltd., European Union, BASIX OERC etc., during the period under dispute, cannot be subjected to levy of Service tax in the hands of the Appellant in terms of the legal provisions existed at the material time. They also submitted that the aforesaid services cannot be considered to have been provided to a client in as much as the same have been provided to the main contractor engaging the Appellant as a sub-contractor. Thus, the said service provided by the Appellant is outside the ambit of Section 65(105)(r) of the Act. In this regard they placed their reliance on the decision of the Hon ble CESTAT in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as a specified service provided to any person by any other person as is the case for most of the entries in Section 65(105) of the Finance Act, 1994 as it stands today. Earlier the nature of the person providing service as well as the nature of the person availing service was specified in many of the taxable entries. For example if service provided to a customer by a telegraphic authority was taxed, the service provided by one telegraphic authority to another telegraphic authority for the former to render service to the customer was not under the tax net. Such issues came up also in the case of service provided to a client by a consulting engineer. The sub-contractor who was carrying out part of the activity may not have fitted into the definition of consulting engineer and the consulting engineer subcontracting the work might not have fitted into the definition of a client . It is in such situations that the impugned clarifications were issued by the Board. The clarifications issued by Board do not expose a legal position that no sub-contractor is liable to pay service tax on any taxable activity. 15 . The liability to tax has to be decided with reference to the definit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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