Custom, Excise & Service Tax Tribunal
M/S Crisil Ltd vs Commissioner Of Central Excise, ... on 18 May, 2016
IN THE CUSTOMS, EXCISE AND SERVECE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI COURT NO. IV APPEAL NO. ST/57/12-Mum (Arising out of Order-in-Original No. 72/BR-72/ST/Th-I/2011 dated 31.10.2011 passed by the Commissioner of Central Excise, Thane-I.) For approval and signature: Honble Mr. Ramesh Nair, Member (Judicial) Honble Mr. C.J. Mathew, Member (Technical) =====================================================
1. Whether Press Reporters may be allowed to see : No
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 : No CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether their Lordships wish to see the fair copy : Seen
of the order?
4. Whether order is to be circulated to the Departmental : Yes
authorities?
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M/s CRISIL Ltd.
Appellant
Vs.
Commissioner of Central Excise, Thane-I
Respondent
Appearance:
Shri R.G. Sheth, Advocate
for Appellant
Shri A.K. Goswami, Addl. Commr. (A.R.)
for Respondent
CORAM:
HONBLE SHRI RAMESH NAIR, MEMBER (JUDICIAL)
HONBLE SHRI C.J. MATHEW, MEMBER (TECHNICAL)
Date of Hearing: 18.05.2016
Date of Decision: 18.05.2016
ORDER NO.
Per: Ramesh Nair:
The appellant M/s CRISIL Ltd., is registered with the Service Tax department under the category of Credit Rating Agency since 1998. Apart from credit rating activity, the appellant also undertakes certain financial advisory services in respect of energy, banking, development, finance, transport and urban infrastructure, disinvestment and risk management. The appellant started paying Service Tax on the aforesaid services under the head of Banking and Other Financial Services w.e.f. 16.08.2002 when the term body corporate was included in addition to banking and non-banking financial companies as the provider of such services. The department accepted the classification of the services rendered by the appellant under Banking and Other Financial Services w.e.f. 16.08.2002. However a show-cause notice dated 20.02.2003 was issued for the period 1999-2000 to 2001-02 demanding of Service Tax of Rs. 1,50,42,302/- by proposing to classify the financial advisory services rendered by them under the category of Management Consultancy Service. In the adjudication the demand along with interest and penalty was confirmed. Being aggrieved by the impugned order the appellant is before us.
2. Shri R.G. Sheth, learned Counsel appearing on behalf of the appellant submits that as per Board Circular No. B-11/3/98-TRU dated 07.10.1998 it was clarified that information and advisory services, if any, rendered by credit rating agency should not attract Service Tax for the reason that said services does not fall under the definition of Credit Rating Agency services. Therefore, the appellant were of bona fide belief that they were not required to pay any Service Tax on the information/advisory services rendered by them. He also submits that the services of Management Consultancy Service does not include the financial advisory services. The appellant has not rendered any advice in respect to management of any organisation. He further submits that the demand is time barred as there is no specific allegation for invoking extended period of limitation. Even the show-cause notice merely averred that the amount appears to have escaped assessment. The appellant had a bona fide belief regarding non-taxable of the services on the basis of Board Circular. There are various correspondence with the Director General of Service Tax on the issue of taxability on the services in question, the show-cause notice also issued due to audit objection. The appellant have been paying Service Tax on credit rating activities from October, 1998 but in respect of advisory services, since there was a bona fide belief as per Board Circular dated 07.10.1998 they have not paid the Service Tax. The appellant have been filing the Service Tax return regularly. Therefore, in this fact there is no suppression of fact on the part of the appellant, therefore the extended period of demand have not been invoked, for the same reason, the penalties proposed under Section 76 & 77 of the Finance Act, 1994 is also not correct.
3. Shri A.K. Goswami, learned Additional Commissioner (A.R.) appearing on behalf of the Revenue reiterates the findings of the lower authorities.
4. We have carefully considered the submissions made by both the sides. We find that on the services in question the appellant has been paying Service Tax under the head of Banking and Other Financial Services w.e.f. 16.08.2002 and the Department had accepted the same. That being so, we do not understand how for the previous period the Department can demand Service Tax on the very same activity under the category of Management Consultancy Service. On the identical case this Tribunals decision in the case of HSBC Securities & Capital Markets (I) Pvt. Ltd. Vs. Commissioner of Service Tax, Mumbai [2009 (13) STR 62], it was held that advisory and due diligence services on acquisition of shares in listed companies rendered to an existing organisation cannot be considered to be Management Consultancy Service. Similarly, in the case of Punjab Venture Capital Ltd. Vs. Commissioner of Central Excise, Chandigarh [2011 (24) STR 410], it was held that the consultancy of fund management including the identification of the projects was held could not fall under Management Consultancy Service. The claim of the appellant is that service provided by them is admittedly covered under banking and other financial services. The definition of Banking and Other Financial Services is as below:-
Banking and Other Financial Services means, the following services provided by a banking company or a financial institution including a non-banking financial company, namely
(a) financial leasing services including equipment leasing and hire-purchase by a body corporate;
(b) credit card services;
(c) merchant banking services;
(d) securities and foreign exchange (forex) broking
(e) Asset management including portfolio management, all forms of fund management, pension fund management, custodial depository and trust services, but does not include cash management.
(f) Advisory and other auxiliary financial services including investment and portfolio research and advice, advice on mergers and acquisitions and advice on corporate restructuring and strategy; and
(g) Provision and transfer of information and data processing.
5. We find that the advisory service of the appellant is clearly covered under clause (f) of the definition. The Departments claim that the services covered under Management Consultancy Service the definition is reproduced below:-
Management Consultant U/s 65(37) 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 nay person who renders any advice, consultancy or technical assistance relating to conceptualising devising, development, modification, rectification or up-gradation of any working system of any organisation.
The plain reading of above definition of Management Consultancy Service it is seen that in the inclusion clause, services of any advice consultancy or technical assistance relating to conceptualising devising, development, modification, rectification or up-gradation of any working system of any organisation falls under the definition of Management Consultancy Service. From the fact of the present case these services were not provided by the appellant for any organisation. The department has not raised any objection in classifying the advisory services under Banking and Other Financial Services by the appellant. Therefore department cannot take stand that the same service prior to 16.08.2002 was falling under Management Consultancy Service and after 16.08.2002 it is classifiable under Banking and Other Financial Services. We have also considered the Board Circular dated 07.10.1998 wherein it was categorically clarified that information and advisory services, if any, rendered by credit rating services would not attract the Service Tax. As per the above discussion, we are of the clear view that the advisory service provided by the appellant does not fall under the category of Management Consultancy Service, however it is correctly classifiable under Banking and Other Financial Services. Therefore, the same was not taxable prior to 16.08.2002. Therefore the impugned order confirming the demand of Service Tax under the head of Management Consultancy Service is not legal and correct. We therefore set aside the impugned order and allow the appeal.
(Operative portion of the order pronounced in open Court) (C.J. Mathew) (Ramesh Nair) Member (Technical) Member (Judicial) Sp 2 APPEAL NO. ST/57/12-Mum