Custom, Excise & Service Tax Tribunal
Tata Technologies Ltd vs Commissioner Of Central Excise, Pune on 26 August, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT No. I APPEAL No.ST/754/10-Mum (Arising out of Order-in-Appeal No. PI/RKS/166/2010 dated 29.09.2010 passed by Commissioner of Central Excise (Appeals), Pune-1) For approval and signature: Honble Mr. M.V. Ravindran, Member (Judicial) and 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?
====================================================== Tata Technologies Ltd. Appellant Vs. Commissioner of Central Excise, Pune-1 Respondent Appearance: Shri Vinay Jain, C.A. for Appellant Shri A.B. Kulgod, Additional Commissioner (AR), for Respondent CORAM: Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. C.J. Mathew, Member (Technical) Date of Hearing : 26/08/2015 Date of Decision : 26/08/2015 ORDER NO Per: M.V. Ravindran
This appeal is directed against Order-in-Appeal No. PI/RKS/166/2010 dated 29.09.2010.
2. Briefly stated the facts of the case are that, M/s Tata Technologies Ltd. (hereinafter referred to as the appellants) are holders of Service Tax Registration No. AAACT3092NST001 and engaged in providing various services such as On line Information Services, Business Auxiliary Services, Consulting Engineer Services, Commercial Training and Maintenance and Repairs etc. During audit on the records of the appellants, it was observed that, they were collecting Rs. 5,00,000/- per month from M/s Tata Motors Pimpri, for providing Information Technology Support of Mr. Jefferey Sage, Chief Operating Officer of the appellants. The services rendered by Mr. Sage, are covered under the category of Management Consultancy services and the appellants are therefore, liable to pay service tax on the value of services amounting to Rs.1,20,00,000/- received from M/s Tata Motors Ltd., during the period 1.4.2004 to 31.3.2006. However, the appellants failed to inform about providing services to M/s Tata Motors and also failed to disclose wholly and truly all the material facts necessary for assessment of Service Tax. They have thus willfully suppressed the facts with an intent to evade payment of Service Tax.
3. Show cause notice was issued for the demand of service tax under the category of Management Consultant Services, interest thereof and for imposition of penalties. The adjudicating authority after following due process of law confirmed the demand with interest and also imposed penalties. An appeal filed against the adjudication order was rejected by the first appellate authority.
4. Learned counsel would take us through the entire case records and submit that the classification of the services under Management Consultancy Services is totally incorrect. It is his submission that the appellant had deputed their chief operating officer to Tata Motors Ltd. for overseeing the SAP implementation progress, it cannot be covered under the category of Management Services. He would draw our attention to decision of the Tribunal in the case of IBM India Pvt. Ltd.-2010 (17) STR-317 and submit that for the implementation of ERP, it was held that it cannot be said Management Services. It is his submission that an appeal filed by the Revenue to the Apex Court was dismissed as reported at 2010 (18) STR J 137 (SC).
5. Learned departmental representative reiterates the findings of the lower authorities.
6. After considering the submission made by both sides and perusal of records, we find that the issue involved is regarding the classification and consequent demand of service tax from the appellant under the category of Management Consultancy Services.
7. Undisputed facts are the Chief Operating Officer of the appellant was deputed to Tata Motors Ltd. during the period 1.4.2004 to 31. 3. 2006 to oversee SAP Implementation progress in various areas such as finance, procurement, planning, H.R. etc, SAP Implementation Services, Post Implementation, SAP Support for resolving SAP related problems and Software Development Services in the aria of protect Tata Management. It can be seen from the above factual matrix that the services rendered by the Chief Operating Officer of the appellant was in respect of implementation of software and related work thereof. Both the lower authorities have held that this activity would fall under the category of Management Consultancy Services on the findings that the Chief Officer was undertaking all the activities that covered under Management Consultancy Services. We find that the findings of the lower authorities, and, as argued by the learned departmental representative, as unacceptable, on the ground that similar issue was decided by this Tribunal in the case of IBM India Pvt. Ltd. (supra) (where in one of us i.e. member judicial was on bench), and held the favor of assessee therein. We reproduce the relevant Paragraph No. 6, 7.
6.?We have carefully gone through the records of the case. The point at issue is the leviability to Service Tax under the category of management consultancy service in respect of the ERP implementation services. It is seen that the Department attempted to classify the ERP services under management consultancy service earlier and the Tribunals decisions categorically held that during those time, the said services would fall under the category of consulting engineering services, however, they were excluded from the scope of consulting engineering services by virtue of initially an exemption Notification 4/99-S.T., dated 28-2-1999 initially and later by excluding it from the scope of consulting engineering services in the definition itself. Once a particular service is excluded from the scope of service tax where it normally is supposed to fall then it cannot be taxed under some other category. This principle has been followed in the case laws of Federal Bank. Ltd. and also Lal Pathlabs Ludhiana, Collection Centre cases which have been cited earlier. However, w.e.f. 16-5-2008, information technology service was introduced. The definition of information technology service is any service provided or to be provided to any person in relation to information technology software for use in the course, or furtherance, of business or commerce, including.
(i) development of information technology software,
(ii) study, analysis, design and programming of information technology software,
(iii) adaptation, up gradation, enhancement, implementation and other similar services related to information technology software,
(iv) providing advice, consultancy and assistance on matters related to information technology software, including conducting feasibility studies on the implementation of a system, specifications for a database design guidance and assistance during the start-up phase of a new system, specifications to secure a database, advice on proprietary information technology software,
(v) acquiring the right to use information technology software for commercial exploitation including right to reproduce, distribute and sell information technology software and right to use software components for the creation of and inclusion in other information technology software products.
(vi) Acquiring the right to use information technology software supplied electronically.
7.?In the present case, the ERP implementation service is definitely for use in furtherance of business and commerce and the service under dispute is for the implementation. So, implementation of the ERP services is specifically covered under the information technology service, which was effective only from 16-5-2008. Under these circumstances, it cannot be liable to Service Tax for a period prior to that. In the present case, the entire period is prior to 16-5-2008. The appellants have clearly shown that prior to 16-5-2008, even the services rendered by the appellant were excluded from the scope of consulting engineers service and also the judicial pronouncements made it clear that they would not be covered under the management consultancy services. In view of these, there is no merit in the demands confirming the Service Tax of the services under the category of management consultancy services for the period prior to 16-5-2008. It should be borne in mind that the appellants have already been paying the Service Tax for ERP Planning and advice under the category of management consultancy service. Hence, the impugned orders have not merit. We set aside the same and allow the appeals with consequential relief.
8. Our above reproduced views are upheld by the Apex Court by dismissing the civil appeal filed by the Revenue against the order.
9. In view of the facts that similar issue has attained finality in hands of Apex Court, we hold that the impugned order is unsustainable and liable to be set aside and we do so. The impugned order is set aside and the appeal is allowed.
(Pronounced in Court) (C.J. Mathew) Member (Technical) (M.V. Ravindran) Member (Judicial) akp 1 5 APPEAL No.ST/754/10-Mum