Customs, Excise and Gold Tribunal - Tamil Nadu
S.B. Billimoria And Co. vs Commissioner Of Central Excise on 21 February, 2006
Equivalent citations: 2006(107)ECC578, 2006ECR578(TRI.-CHENNAI), 2006[4]S.T.R.214
ORDER P.G. Chacko, Member (J)
1. The lower authorities have demanded Service Tax of Rs. 5,87,450/- from the appellants, who are Practising Chartered Accountants (PCAs), for the period 16.10.1998 to 01.08.2002. They have also imposed penalties on the party. After hearing both sides and considering their submissions, we find that the tax liability of the appellants will depend on whether the amendment brought to Notification No. 59/98-ST dated 16.10.1998 by Notification No. 15/2002-ST dated 01.08.2002 is retrospective or not. The appellants had been providing taxable services listed as (i) to (xi) in the exclusionary part of Exemption Notification No. 59/98-ST ibid:
(i) accounting and auditing; or
(ii) cost accounting and cost auditing; or
(iii) secretarial auditing; or
(iv) verification of declarations in prescribed forms of compliances for obtaining a certificate of commencement of business or commencement of other business under Section 149 of the Companies Act, 1956 (1 of 1956); or
(v) signing of the annual return of listed companies under Section 161 of the Companies Act (1 of 1956); or
(vi) certification that requirements of Schedule XIII to the Companies Act, 1956 (1 of 1956) have been complied with as regards statutory guidelines for appointment of managerial personnel and payment of managerial remuneration to them without the approval of the Central Government under Section 269 and Schedule XIII, of the Companies Act, 1956 (1 of 1956); or
(vii) certification of documents to be filed by companies with the Registrar of Companies under the Companies Act, 1956 (1 of 1956); or
(viii) certification in Form 1 that the whole of the amount remaining unpaid or unclaimed for a period of three years from the date of transfer to the special account under Sub-section (1) and Sub-section (2) of Section 205A of the Companies Act, 1956 (1 of 1956) has been transferred to the General Revenue Account of the Central Government under the Companies Unpaid Dividend (Transfer to General Revenue Account of the Central Government) Rules, 1978; or
(ix) certification of documents under the Exports and Imports Policy (1997-2000) of the Government of India; or
(x) certification for exchange control purposes which a practising chartered accountant can issue as documentary evidence in support of certain applications under the Foreign Exchange Regulation Act, 1973 (46 of 1973); or
(xi) certification in respect of valuation of instruments or assets as per Rule 8A(7) of the Wealth Tax Rules, 1957.
The Notification exempted from payment of tax taxable services provided by a PCA (in his professional capacity) to a client, other than the afore-listed services. The amending Notification added the following Explanation (along with Illustration) to the above Notification:
Explanation - Nothing contained in this notification shall apply to the services provided by the practising chartered accountant, a practising company secretary or a practising cost accountant which may fall in any other taxable services as defined in Clause (90) of Section 65 of the said Act.
Illustration - The service provided by a practising chartered accountant, a practising company secretary or a practising cost accountant in connection with the management of any organization in any manner or recruitment of manpower in any manner shall be deemed to be the taxable service provided under the category of management consultant or manpower recruitment agency, as the case may be. Therefore no exemption under this notification shall be applicable to such practising chartered accountant, a practising company secretary or a practising cost accountant.
It is submitted by ld. Senior Advocate that the above Explanation has no retrospective effect and hence the service of Management Consultant provided by the appellants during the period of dispute was not taxable and that the same became taxable only with effect from 01.08.2002. On the other hand, ld. SDR submits that an Explanation, per se, is clarificatory and hence must be given retrospective effect. In this connection, reliance is placed on the Rajasthan High Court's judgment in Shree Cement Ltd. v. Union of India 2003 160 E.L.T. 42 (Raj.).
2. We have considered the submissions. The Explanation which arose for interpretation by the High Court reads thus:
For the purpose of this sub-rule, it is hereby clarified that the term 'inputs' refers only to such inputs as may be specified in a notification issued under Rule 57A The Hon'ble High Court held the above Explanation to be clarificatory and retrospective and accordingly, interpreted Rule 57B(1) of Central Excise Rules, 1944. We find that the Explanation considered by the High Court was expressly clarificatory inasmuch as it used the word 'clarified'. The Explanation now under consideration in the present case is couched in a different language. Prima facie, it purports to add to the tax liability of a PCA, Practising Company Secretary and Practising Cost Accountant, by providing that the exemption under Notification No. 59/98-ST would not be applicable to services provided by these professionals, which may fall in any other taxable services defined in Clause (90) of Section 65 of the Finance Act, 1994. The legislative intent is amply clear. Prima facie, taxable services under Clause 90 of Section 65 of the Act were sought to be excluded from the scope of exemption. Notification No. 59/98-ST, on its face, did not include "Management Consultant's service" in the list of 'taxable services' of PCAs. Hence for the period of dispute, apparently, the appellants were not liable to pay Service tax on Management Consultant's service rendered by them. They have made out prima facie case for waiver of predeposit and stay of recovery. Accordingly, there will be waiver and stay as prayed for.
(Dictated and pronounced in open Court)