Custom, Excise & Service Tax Tribunal
C.C.E. Allahabad vs M/S Bharat Yantra Nigam Ltd on 16 May, 2014
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI, PRINCIPAL BENCH NEW DELHI, COURT NO. I Date of Hearing/Decision: 16.05.14 Appeal No.ST/244-247/2009 -CU[DB] [Arising out of Order-In-Appeal No.49,50,51, & 52-ST/ALLD./2008, dt.29.12.2008, passed by Commissioner (Appeals) Central Excise Allahabad (U.P.)] For approval and signature: Honble Mr. Justice G.Raghuram, President Honble Mr. Rakesh Kumar, Member(Technical) 1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3 Whether Their Lordships wish to see the fair copy of the Order? 4 Whether Order is to be circulated to the Departmental authorities? C.C.E. Allahabad Appellant Vs. M/s Bharat Yantra Nigam Ltd. Respondent
Present:
Sh. Jayant Sahay, DR. - for the appellant None - for the Respondent Coram :
Honble Mr. Justice G.Raghuram, President Hon'ble Mr. Rakesh Kumar, Member (Technical) FINAL ORDER NO: 52328-52331/2014 Per Rakesh Kumar:-
The facts leading to the filing of these four appeals by the Revenue, are in brief as under:-
1.1 The Respondent are a Public Sector Undertaking engaged in manufacture of machine tools. M/s. Bharat Heavy Plate and Vessels Ltd. (BHPVL), Vishakhapatnam; M/s. Bharat Pump & Compressors Ltd. (BPCL); Naini, Allahabad; M/s. Bridge and Roof Co.(India) Ltd, Calcutta; M/s. Richardson and Cruddas Ltd., Mumbai; M/s. Triveni Structural Ltd. (T.S.L.) Naini; Allahabad and M/s. Tungbhadra Steels Products Ltd. are subsidiary companies of the Respondent. The Respondent have 70% to 100% share holding in the above mentioned subsidiary companies. In the year 1999-200o the Memorandums of Understanding (MOUs) were signed between the Respondent and the above mentioned subsidiaries to:-
(i) monitor the performance of Group Companies on a monthly basis and take timely corrective actions in case of slippages;
(ii) review the performance-targets of the subsidiaries;
(iii) provide technology up-gradation plan;
(iv) provide research and development plan;
(v) review customers project execution plan;
(vi) provide consultancy study plan in order to diagnose the operational problems as well as analyze internal and external environments, markets etc. 1.2 The Respondent for the above services in respect of their subsidiaries were charging an amount as Management Consultancy Services charges. The Department was of the view that the Respondent have provided the management consultancy service taxable under section 65(105)(V) read with section 65(65) of the Finance Act, 1994 to their subsidiaries and on this basis four Show Cause Notices were issued to the Respondent for recovery for service tax amounting to Rs.29,25,300/-, Rs.1,74,195/-, Rs.80,400/- and Rs.2,19,824/-. The Show Cause Notices were adjudicated by the Additional Commissioner by four separate orders by which the above mentioned service tax demands were confirmed along with interest and penalties were imposed on the Respondent under section 75, 76 and77 of the Finance Act, 1994. On appeal being filed to Commissioner (Appeals) against these orders of the Additional Commissioner the Commissioner (Appeals), by a common order-in-appeal dt. 29.12.08 allowed the appeals and set aside the Additional Commissioners orders holding that the activity of the Respondent is not covered by the definition of Management Consultancy Services as the Respondent as holding company are maintaining the activities of subsidiary companies in which they have 70% to 100% stock is in their own interest and it cannot be called a service has been provided to the subsidiary companies. Against this order of the Commissioner (Appeals) these four appeals have been filed by the Revenue.
2. None appeared for the Respondent though a notice for hearing had been send to them well in advance. In view of this, so far as, the Respondent are concerned, in accordance of the Provisions of Rule 21 of the CESTAT procedure Rules, the matter in respect of the Respondent is being decided ex-parte.
3. Heard Sh. Jayant Sahay, the learned DR, who assailed the impugned order by reiterating the grounds of Revenues appeal and pleaded that the Respondent and their subsidiaries are two independent legal entities and findings of the Commissioner (Appeals), that there is no service provider and client relationship between them is not correct. He also emphasized that the services provided by the Respondent are covered by the definition of Management Consultancy Services under section 65(65) of the Finance Act, 1994. He, therefore, pleaded that the impugned order is not correct.
4. We have considered the submissions of the learned DR and have gone through the records of this case. The Respondent as holding company of their subsidiary companies as mentioned above, are monitoring their performance regularly and take timely corrective actions in case of slippages, provide technology up-gradation plan, research and development plan, customers project execution plan etc. in order to diagnose the operational problems and provide solutions in time. The services being provided by the Respondent are clearly covered by the definition of Management Consultancy Services under section 65(65) of the Finance Act, 1994. We do not agree with the findings of the Additional Commissioner that there is no service provide and client relationship between the Respondent and their subsidiaries, as the Respondent as holding company and their subsidiary are independent entities. We find that same view has been taken by a Coordination Bench of the Tribunal in case of CST, Mumbai Vs. Essel Corporate Services Pvt. Ltd. reported in 2014-TIOL-832-CESTAT-MUM. In view of this the impugned order setting aside the service tax demand is not correct. However, since the Respondent are a Public Section Undertaking, the longer limitation period for demand of non-paid service tax under proviso to section 73(1) would not be invokable, as in the circumstances of the case the allegation of wilful mis-statement, suppression of facts or deliberate contravention of the Rules to evade the payment of service tax, cannot be made against the Respondent. Therefore the service tax demand would be confined only to normal limitation period. In view of the circumstances of the case, the penalty also has to be waived by invoking Section 80.
5. In view of the above discussions, the impugned order is set aside and the orders in originally passed by the Original Adjudication Orders are restored only to the extent of confirmation of service tax demands within the normal limitation period along with interest thereon under section 75. However the penalty under section 75A, 76, 77 and 78 is not imposable and the same is not restored. The Appeals stands disposed of as above.
(Justice G.Raghuram) President (Rakesh Kumar) Member (Technical) S.Kaur 1