Custom, Excise & Service Tax Tribunal
Ibm India (P) Ltd vs Commissioner Of Central Tax, Bangaluru ... on 9 July, 2024
ST/429, 548, 549/2009
CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL
BANGALORE
REGIONAL BENCH - COURT NO. 1
Service Tax Appeal No. 429 of 2009
(Arising out of Order-in-Original No.17/2008 dated 31.12.2008
passed by the Commissioner of Central Excise, Bangalore-III
Commissionerate, Bangalore.)
M/s. IBM India (P) Ltd.
No.12, Subramanya Arcade, Appellant(s)
Bannerghatta Road,
Bangalore - 560 029.
VERSUS
The Commissioner of Central
Excise
Bangalore-III Commissionerate Respondent(s)
P.B. No.5400, C. R. Building, Queen's Road, Bangalore - 560 001.
WITH Service Tax Appeal No. 548 of 2009 (Arising out of Order-in-Original No.15 & 16/2009 dated 27.02.2009 passed by the Commissioner of Service Tax, Bangalore.) M/s. Wipro Ltd.
(Infotech Division) Doddakannelli, Sarjapur Road, Electronics City, Hosur Road Bangalore - 560 035. Appellant(s) VERSUS The Commissioner of Service Tax No.16/1, 5th Floor, S.P. Complex, Lalbagh Road, Bangalore. Respondent(s) AND Service Tax Appeal No. 549 of 2009 (Arising out of Order-in-Original No.15 & 16/2009 dated 27.02.2009 passed by the Commissioner of Service Tax, Bangalore.) Page 1 of 57 ST/429, 548, 549/2009 M/s. Wipro Ltd.
(Infotech Division) Doddakannelli, Sarjapur Road, Electronics City, Hosur Road Bangalore - 560 035. Appellant(s) VERSUS The Commissioner of Service Tax No.16/1, S.P. Complex, 5th Floor, Lalbagh Road, Bangalore. Respondent(s) APPEARANCE:
Shri Harish Bindumadhavan, Advocate for the Appellant (M/s. IBM India P. Ltd.) Shri V. Lakshmi Kumaran, Sr. Advocate, S/Shri Ravi Raghavan, Syed Peeran and Ms. Meghna Lal, Advocates for M/s. Wipro Ltd. Shri P. R. V. Ramanan, Special Counsel (AR) for the Respondent CORAM: HON'BLE DR. D.M. MISRA, MEMBER (JUDICIAL) HON'BLE MRS. R. BHAGYA DEVI, MEMBER (TECHNICAL) Final Order No. 20542 - 20544 /2024 DATE OF HEARING: 10.01.2024 DATE OF DECISION: 09.07.2024 PER : R. BHAGYA DEVI These three appeals are filed against respective Orders-in- Original passed by the Commissioner of Service Tax, Bangalore. Since common issues are involved in all these appeals, they are taken up together for hearing and disposal.
Service Tax Appeal No. 429 of 2009
2. M/s. IBM India Private Limited., Bangalore the appellant are engaged in the activity of development of software for domestic clients as well as overseas clients. They also provide services to their clients under 'Facility Management Services', Page 2 of 57 ST/429, 548, 549/2009 'Maintenance Services' and 'Consulting Services'. The DGCEI after detailed investigations alleged that the appellant had performed the services classifiable under 'Management Consultancy Service' as defined under section 65(65) of the Finance Act 1994 and taxable under Section 65(105)(r) of the Finance Act 1994. Accordingly, a show-cause notice No.62/2006- 07 dated 21.10.2006 was issued demanding duty amount of Rs.72,25,49,033/- for the period September 2003 to April 2006. The Commissioner on perusal of 12 contract agreements entered by the appellant for providing services to their clients found that the appellant was in fact managing the information technology infrastructure environment of their clients and the operation of the computer systems, which was only a peripheral in nature. He observed that the activities undertaken by the appellant are core activities to manage the office of their clients' organizations and hence, these services fall under the category of 'Management Consultancy Service' and not under 'Business Auxiliary Service' as claimed by the appellant. Accordingly, vide impugned Order No.17/2008 dated 31.12.2008, the Commissioner confirmed service tax demand of Rs.72,25,49,033/- under Section 73 of the Finance Act 1994 along with interest and imposed penalties under Section 76 and
78. Assailing the above order, the appellant is in appeal before us.
3. The learned counsel Shri Harish Bindumadhavan on behalf of M/s. IBM India (P) Ltd. made the following submissions:
(i) The Department has interpreted the clauses of the IT Outsourcing Agreement with M/s. Bharti Tele-Ventures Ltd.
dated March 26, 2004 as well as others, to suit revenue considerations and has not read the contracts Page 3 of 57 ST/429, 548, 549/2009 harmoniously, in an integrated and holistic manner but considered the same in bits and pieces. It is submitted that any consulting/advisory work and technical assistance related to IT and software/hardware engineering was excluded from 'consulting engineer' and hence, could not be subjected to tax under a general category i.e., 'Management Consultancy'. The subject services provided by the Appellant cannot be taxed under any head whatsoever as it relates to management of the entire IT infrastructure of the client/customer, which is not the same as consulting or advisory service. It is further stated that the show-cause notice itself admits that they had undertaken activities outsourced by their clients and it can be best classified under the category of 'Support Services of Business or Commerce' w.e.f. May 1, 2006.
(ii) It is submitted that since IT services was excluded from the purview of Service Tax, especially "Computer Facility Management" it cannot be artificially brought into the ambit of 'Management Consultancy Service' (MCS). Referring to the Board Circular No. F. No. 334/1/2003-TRU dated February 28, 2003, it is stated that it has been clarified that computer enabled services, namely data proceedings, networking, back-office proceeding, computer facility management shall not be subjected to service tax. Further, relies on the Board Circular No.62/11/2003-ST dated August 21, 2003 wherein it has been clarified that any service in relation to designing or development of computer software or system networking or any other service primarily in relation to operation of computer systems, are outside the purview of Service Tax. The activities undertaken by them cannot be classified under Page 4 of 57 ST/429, 548, 549/2009 'Management Consultancy Service' for the period prior to May 1, 2006, as settled in the case of Hewlett Packard India Sales P. Ltd. v. CCE, C & ST, Bangalore-LTU 2015 (38) STR 663 (Tri.-Bang.) and this decision has attained finality as the department has not challenged it. The definition of 'Management Consultant' prior to May 1, 2006 clearly hold that appellant's services were not covered under the said category since they were not in the nature of conceptualizing, devising, development, modification, rectification or up-gradating of any working system of any organization. The computer Facility Management Services are not liable to Service Tax under MCS since the definition of MCS relates to advisory and consultancy services and not executory services as is held in the case of Glaxo SmithKline Pharmaceuticals Ltd.
v. CCE, Mumbai-IV 2005 (188) ELT 171 (Tri.-
Mumbai) wherein it was held that "..would support the acceptance of the plea made by the ld. Advocate that the nature of the Executory Services provided by the Marketing Team Staff would more appropriately fall under 'business auxiliary service' & not 'Management Consultancy service' as the definition of Management Consultancy Service remains the same even after the levy of inclusion & of Service Tax on "business auxiliary service" in the year 2003. When an existing Tariff definition remains the same, then the introduction of new Tariff entry would imply that the coverage under the new Tariff for purpose of Tax is an area not covered by the earlier entry. The new entry is extension of the scope of coverage if Service Tax and not carving out of a new entry, from the erstwhile entry of "Management Consultancy Service". Therefore, it has to be Page 5 of 57 ST/429, 548, 549/2009 held, that in the facts of this case, the levy of Service Tax on Staff Costs defined by BWIL, under the heading 'Management Consultancy Service' cannot be upheld. Levy on such costs could be as on business auxiliary service, which was not a Taxable Service prior to 2003 & appellant is not a service provider as Management Consultant."
(iii) The learned counsel further submits that it is a settled position of law that in case a new entry or tariff has been introduced in the statute books without any modification to the old entries, it implies that the services covered under the new entry would not be covered under the old entries. In the present case, the category of 'Support Services of Business or Commerce' was introduced pursuant to the introduction to new definition of 'Management Consultancy Service'. Hence, the IT Services shall not be covered under MCS.
(iv) In the present case, their services are far more comprehensive and wider than mere technical assistance, advice, consultancy in respect of the above activities. Further, the appellant is not involved in activities of conceptualizing, devising, development, modification, rectification or upgradation, as clear from the scope of services, but only responsible for handling and operation of its customer's entire IT system, hence it cannot be equated with the definition of management consultancy. The Appellant humbly submits that while "in relation to"
gives the definition of management and business consultant a wide scope, it must be read with the words preceding the said phrase, which are limited to 'advice, consultancy or technical assistance' and the services Page 6 of 57 ST/429, 548, 549/2009 rendered by them if of outsourcing and operation of entire IT systems. It is submitted that the actual performance of Appellant's services in respect of helpdesk services, data centre services, application management services, network station management services, data network services and disaster recovery services, all in respect of operating customer's IT systems, towards operation of the entire IT system for the customer are not covered under the definition of a 'Management or Business Consultant'. In this regard, the Appellant places reliance on the case of Santani Sales Organization vs. CESTAT, New Delhi:
2018 (13) GSTL 144 (Del.) which held that, 'in taxing enactment one should normally look at what is said in the provision, without reading anything into it impliedly or on the basis of presumption, for there is no room for any intendment'.
(v) It is stated that the amended definition under MCS has been expanded to include any person rendering any advice, consultancy or technical assistance in relation to management of IT resources and w.e.f. May 1, 2006, they classified their services under the amended definition of 'Management Consultant', since their services would be covered under 'management of IT resources'. Referring to the Circular No. 334/1/2008-TRU dated February 29, 2009, which makes reference to management of information technology resources as leviable to Service Tax under MCS as per Section 65(65), it is stated that the first part of the definition remains the same, i.e., 'advice, consultancy or technical assistance'; the second part has to be read with a wide amplitude on account of insertion of an expansive phrase 'management of IT resources'. It is submitted that Page 7 of 57 ST/429, 548, 549/2009 an amendment to the provision cannot be given effect 'retrospectively' in order to make a person liable for payment of tax. The amendment to definition from May 1, 2006 was with a specific purpose of increasing the scope of definition of 'Management Consultancy Service' and not to merely clarify or specify the areas of management. The definition of 'management consultant' as it existed till April 30, 2006, cannot be treated as a wide definition and must be interpreted in its true limited scope or else, the amendment brought in w.e.f. May 1, 2006 will become completely redundant.
(vi) The Appellant places reliance on the case of CCT & CE, Mumbai vs. Bharat Petroleum Corporation Ltd.: 2019 (24) GSTL 347 (Bom.) which held that Agreement has to be read as a whole, in a holistic manner. The Appellant also relies on the apex court's judgment in Super Poly Fabriks Ltd. v. CCE, Punjab 2008 (10) STR 545 (SC).
In this regard, the Appellant submits that one of the settled principles of construction is to read a provision in such manner that it may not be self-defeating, as held in International Airports Authority vs. Grand Slam International of India 1995 (77) ELT 753 (S.C.). The Appellant also submits that the purpose and effect of substitution of a definition in the present case, explicitly clarifies that when IT services/related services were outside the purview of tax net, it cannot be artificially brought into the tax net and reliance is placed on the case of Max Life Insurance Co. India Ltd. vs. Commr. of CE & ST, LTU, New Delhi: 2020 (36) G.S.T.L. 62 (Tri. - Del.), which held that, "Further, we find that Legislature have clarified by substituting clause (ii) in Explanation to Page 8 of 57 ST/429, 548, 549/2009 Section 65(105)(zzzzf), clarified that service tax is leviable only on the management fee or charges which are either fixed by IRDA or actually levied by the insurer, whichever is higher by substituting the Explanation w.e.f. 1-7-2010. An Explanation is meant for clarifying the provision of the main section and accordingly has retrospective effect and is normally effective from the date of the statute, unless otherwise provided in the amending Act or notification. Thus, we hold that in view of the clarification by way of substitution of Explanation II, service tax is not leviable on surrender charges by any stretch of imagination."
(vii) The Department has relied on the decision of Tata Consultancy Services Ltd. vs. CST, Delhi: 2018 (18) GSTL 478 (Tri.-Del.) as affirmed by the Supreme Court in 2018 (18) GSTL J127 (SC) and on the decision of Tata Consultancy Services Ltd. v. CCE, Mumbai 2019 (6) TMI 109-Tri-Mumbai. At the outset, the Appellant submits that the services rendered by the Appellant are distinguishable from the ones in the case of Tata Consultancy Services (TCS), as the IT Outsourcing Agreement with Bharti Tele-Ventures Ltd. dated March 26, 2004, cover a wider scope of work in respect of IT function, than the services provided by TCS and thereby, the said case is distinguishable on facts. The Appellant also submits that the said Tata Consultancy Services decision did not take into consideration the argument with respect to IT Services under Business Auxiliary Service and the interpretation of which was finalized by the Supreme Court in Federal Bank Ltd. v. Asstt. Commr. of C.Ex., Calicut 2009 (13) STR 569 (Tri.-Bang.) affirmed by the Hon'ble Kerala High Court in 2013 (29) STR 554 (Ker.), Page 9 of 57 ST/429, 548, 549/2009 which was further affirmed by the Apex Court in 2016 (42) STR 418 (Supreme Court).
(viii) With regard to limitation, it is submitted that the Appellant had never suppressed or committed fraud as seen from multiple disclosures which were made right from 1998 regarding the nature of services being provided by the Appellant and therefore, such facts were always within the knowledge of the Department and as such, there can never be an allegation of suppression. The Appellant had registered as a Consulting Engineer in the year 1997 itself and were filing returns and duly assessed to tax from time-to-time by the Department and their stand relating to not being legally required to pay service tax from the year 2003 was brought to the notice of the Department in the year 2004 itself as admitted in the notice. Such admission and the letters referred to in the notice establish absence of suppression and the entire demand falls, on this ground itself.
Service Tax Appeal No. 548 and 549 of 2009
4. Similarly, M/s. Wipro Ltd., was also involved in providing Information Technology Facility Management Services to their clients and they were not only responsible for supply of software and hardware but were involved with upgrading, maintenance of entire equipment, coordination with vendors, advice and assist the clients based on their business requirements. Hence, alleging that their services were falling under 'Management Consultancy Service', a show-cause notice dated 25.09.2007 was issued for the period April 2002 to March 2007 for an amount of Rs.22,52,87,920/-. Another periodical show-cause notice dated Page 10 of 57 ST/429, 548, 549/2009 06.08.2008 was issued for Rs.14,47,12,540/- for the period 01.04.2007 to 31.03.2008. The Commissioner vide impugned Order No.15 & 16/2009 dated 27.02.2009 had confirmed the demand for Rs.22,52,87,920/- under Section 73(2) of the Finance Act, 1944, along with interest and penalty under Section 76, 77 and equal amount of duty as penalty under Section 78 of Finance Act, 1944. Vide second show-cause notice dated 06.08.2008, an amount of Rs.14,47,12,540/- was confirmed and all other penalties were dropped. The appellant is in appeal against the above impugned order.
5. Shri V. Lakshmi Kumaran, Sr. Advocate, S/Shri Ravi Raghavan, Syed Peeran and Ms. Meghna Lal, Advocates appeared on behalf of M/s. Wipro Ltd. The gist of the submissions made by the learned Sr. Advocate are as under:
(i) He submitted that the appellant was inter alia engaged in providing information technology software services for the manufacture, sale and maintenance of computers, selling of hardware products of other leading brands, rendering of IT Facility Management Service/ Infrastructure Management Services and trading of software and with effect from 14.09.2004 had obtained centralised registration in respect of all its units. Based on Audit conducted in March 2004, the department vide letter O.C.No.1248/2003 dated 31.03.2004 had raised various objections including objections regarding amount under Account Head 'Revenue-Customer Support-Facility Management' and the Appellant vide letter dated 19.04.2004 relying upon the TRU Clarification issued by Ministry of Finance (D.O.F No. 334/0/2003-TRU dated 28.02.2003) submitted that Computer Facility Page 11 of 57 ST/429, 548, 549/2009 Management falls outside the purview of Service Tax. After the second audit enquiry in January, 2006, no objections were raised in respect of taxability of Facility Management Service. However, DGGEI after detailed investigations issued show-cause Notice No. 59/2007-08 dated 24.09.2007 classifying the 'IT management services' under the category of "Management Consultant Service" and demanded service tax of Rs.22,52,87,920/- in terms of Section 73(1) of the Finance Act,1994 for the period April 2002 to March 2007. Subsequently another Show-cause Notice bearing C.No.IV/16/112/2008-ST dated 06.08.2008 was issued by the Commissioner of Service Tax, Bangalore Service Tax Commissionerate proposing to demand service tax amount of Rs. 14,47,12,540/- for the same activity for the period April, 2007 to March, 2008.
(ii) The learned Sr. Advocate referring to the definition of 'Management Consultancy Service' and the definition of 'Management Consultant' during the disputed period, submits that the term '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 organization or business in any manner and includes any person who renders any advice, consultancy or technical assistance, in relation to certain areas of management. The means portion of the definition per se indicates that a management or business consultant means any person who provides any service in connection with management of any organization or business. It is submitted that the services would necessarily involve a study of the peculiar features of the organization in order to provide suggestions which would Page 12 of 57 ST/429, 548, 549/2009 help the management to organize in a more effective manner. The inclusive portion of the definition further includes any person who renders advice, consultancy or technical assistance in relation to the management of one of the various facets of the company. It is submitted that use of phrase 'in connection with' and 'in relation to' would indicate that the services provided by the management or business consultant is 'advisory' in nature and not actual 'performance' of the management function of the organisation. The services rendered by the appellant nowhere can be said to be in the nature of 'technical assistance' as claimed by the department.
(iii) It is submitted that in the case of Basti Sugar Mills Co.
Ltd vs. Commissioner of Central Excise, Allahabad 2007 (7) S.T.R. 431 (Tri-Del) as affirmed by Supreme Court in Commissioner v. Basti Sugar Mills Co. Ltd 2012 (25) S.T.R J154 (SC) the distinction between advisory service and actual performance of management function has been clearly drawn as seen from the observations reproduced below:
"8. An ocean separates a manager from a management consultant, a performer from an advisor or a coach. That ocean exists in the present case also. We dealt with a similar case in Rolls Royce Industries Power (I) Ltd. (Supra) and held that where the agreement conferred operational autonomy and responsibility on the contracted party, the relationship is not one of consultancy. The ratio of that decision covers the present dispute also. There is no management consultancy in the facts of the present case and the demand is clearly beyond the scope of the statute."
(iv) This Hon'ble Tribunal in the case of Hewlett Packard India Sales P. Ltd. v. Commissioner of C.E., C. & S.T., Page 13 of 57 ST/429, 548, 549/2009 Bangalore reported at 2015 (38) S.T.R. 663 (Tri. - Bang.) (Para 4), while examining an identical fact matrix held that the assessee was not providing Management Consultancy Services and that IT Facility Management Services get fully covered under the scope of Information Technology Software Services, which were not liable to service tax for the period prior to 16.05.2008. Reliance is also placed on the case of Haliburton Offshore Services Inc. v. Commissioner of Service Tax, Mumbai reported at 2015 (37) S.T.R. 634 (Tri.-Mumbai) (Para 10) [affirmed by the Supreme Court at 2015 (39) S.T.R. J240 (S.C.) wherein the assessee was inter alia providing it's clients with manpower to operate technical equipment and machines and the Department sought to levy service tax on the same under the head of 'Consultancy Engineering Service'. The Hon'ble Tribunal held that the scope of work and the activity undertaken was in nature of execution of the job and did not amount to providing consultancy or technical assistance. Similar view was taken by the Hon'ble CESTAT in the following decisions:
• Nirulas Corner House Pvt Ltd Vs CST, New Delhi 2009-
TIOL-130- CESTAT-DEL
• Commissioner of Central Excise, Nashik v. Sahney
Kirkwood Pvt. Ltd. 2014 (35) S.T.R 609 (Tri-Mumbai)
(v) The Appellant submits that in order to understand the meaning of the expression 'advice', 'consultancy' and 'technical assistance' recourse should be taken to the rule of construction of Noscitur a Sociis, which provides that the meaning of a word is to be judged by the company it keeps. According to Maxwell (Interpretation of Statuses, when two or more words which are susceptible of Page 14 of 57 ST/429, 548, 549/2009 analogous meaning are coupled together, they are understood to be used in their cognate sense. In the case of M.K. Ranganathan v. Government of Madras reported at (1955) 2 S.C.R. 374, the Hon'ble Supreme Court has held that it is a legitimate rule of construction to construe words in an Act of Parliament with reference to words found in immediate connection with them. The Appellant submits that by application of the above principle, the expression 'technical assistance' used in the definition of management consultant has to be understood keeping in view the fact that it is sandwiched between the words 'advice' and 'consultancy'. Had the term 'technical assistance' appeared in a standalone manner, the meaning could have been interpreted broadly to cover assistance vide advise and action. However, in the present case, the term occurs along with 'advice' and 'consultancy', which merely cover instances of assistance through advising.
Therefore, assistance in the nature of technical assistance is still in the nature of assistance, i.e., monitoring or helping with the implementation of work and cannot be extended to mean the implementation of work itself. Reference in this regard is drawn from the decision of M.P. Police Housing Corporation Ltd. v. Commissioner of C. Ex. & S.T., Bhopal reported at 2017 (47) S.T.R. 234 (Tri. - Del) (Para 8, 9) wherein the Hon'ble Tribunal held that :
"8. The appellant is supervising the construction and to that extent it can be said as rendering technical assistance. But the words 'technical assistance' as mentioned in the definition refers to advice and consultancy only and does not cover supervision. The words technical assistance is preceded by the words advice and consultancy. It is a well Page 15 of 57 ST/429, 548, 549/2009 laid out principle of interpretation that the term should be read ejusdem generis, i.e., should be read in the context of the preceding words that is advice and consultancy. In this view of things it would be too far-fetched to take the view that supervision of construction is done as part of consulting engineers work."
(vi) It is submitted that in the case of Tata Consultancy Services v. Commissioner of Service Tax, Delhi: 2018 (18) G.S.T.L. 478 (Tri. - Del) [affirmed by the Supreme Court in 2018 (18) G.S.T.L. J127 (S.C.)] and Tata Consultancy Services vs. Commissioner of Central Excise, Mumbai reported at 2019 (6) TMI 109 - Tri.- Mumbai, wherein the Tribunals at Delhi and Mumbai have held that the management of information technology infrastructure is provision of technical assistance under the head of 'Management Consultancy Service'. It is submitted that these decisions are bad in law and do not warrant to be followed as the same are per incuriam and are not good law. As explained in the decision of U. Barkath v. The Director General of Police, Chennai-4 reported at 2019 LABIC 4023, (Para 23, 24, 36) 'per incuriam' are decisions of a court of coordinate or higher jurisdiction in ignorance of the terms of a statute or of a rule having the force of law. A decision is given per incuriam when the court has acted in ignorance of a previous decision. It is submitted that both the decisions of Tata Consultancy Services (supra) have disregarded an already rendered decision of Hewlett Packard India Sales P. Ltd. (supra) of the Hon'ble Tribunal at Bangalore wherein in a similar factual matrix, a coordinate bench of the Tribunal had held that the activity of IT infrastructure management would Page 16 of 57 ST/429, 548, 549/2009 not be leviable to Service Tax under 'Management Consultancy Service'. The said case has been briefly distinguished only in the decision rendered by the Bombay Tribunal, wherein the Tribunal has noted the elements of definition of 'Management Consultancy Service' and held that in the present case the activity will fall within the category without according any reasoning to the same. The Tribunals have also not accorded the due weight to the decision of the Apex Court in Basti Sugar Mills Co. Ltd. v. CCE, Ahmedabad reported at 2007 (7) S.T.R. 431 (Tri. -Del.) affirmed by the Supreme Court at 2012 (25) S.T.R. J154 (S.C.). Both the decisions of Tata Consultancy Service (supra) have distinguished the said case on the fact that the management function was entirely outsourced to a third party in the case of Basti Sugar Mills Co. (supra) which was not the case therein. It is submitted that in the present case, as already submitted above, the entire IT management function has been outsourced to the Appellant, which is partial outsourcing of the management of the company as a whole and still means that the Appellant is undertaking execution at a level. This aspect has not been examined in the above mentioned cases and the Supreme Court ruling in the case of Basti Sugar Mills Co. (supra) has been disregarded on the mere fact that the entire management has not been outsourced herein. It is further submitted that the decisions are also 'per incuriam' in law in view of the fact that they have been passed on utter disregard to the numerous judgements explaining the legal principle and application of ejusdem generis and noscitur a sociis while interpreting the term 'technical assistance' appearing along Page 17 of 57 ST/429, 548, 549/2009 with 'advice' and 'consultancy' and the interpretation given by the Hon'ble Apex Court in the numerous Income Tax rulings, as demonstrated above. It is also stated that the decision in the matter of Tata Consultancy Services (supra) of the Delhi Tribunal has failed to consider earlier decision in the case of MP Police Housing Corporation Ltd. (supra) wherein the Hon'ble Bench interpreted the term 'technical assistance' in light of the terms 'advice' and 'consultancy' and gave a narrow meaning to the same in the context of 'Consulting Engineer Service' where identical phrase was used by the legislature. In light of the abovementioned submissions, the Appellant submits that the decisions in the cases of Tata Consultancy Service (supra), are clearly per incuriam in law and are not good law.
(vii) It is submitted that the issue of taxability of the IT infrastructural management services has not been finally settled in the decision of TATA Consultancy Services (supra) as affirmation at the stage of admission does not merit that the principle of law has been affirmed by the Supreme Court and holds precedential value. Reliance in this regard is placed on the decision of Sun Export Corporation vs. Collector of Customs, Bombay reported at 1997 (93) E.L.T. 641 (S.C.) (Para 13) wherein it was held by a Constitutional Bench of the Apex Court that dismissal at the admission stage cannot be relied upon as a binding precedent. This rule in law has been subsequently followed in various decisions, including the decision in Ahmed Oomerbhoy v. Collector of Central Excise, Bombay reported at 1998 (102) E.L.T. 577 (Tri.-LB), wherein the Larger Bench followed the Page 18 of 57 ST/429, 548, 549/2009 decision of Sun Export Corporation (supra) and held that the dismissal of the Civil Appeal does not award affirmation to the decision. Relevant extract of the decision has been reproduced below:
"19. The challenge before the Supreme Court to the Tribunal decision in Kusum Products case was by way of a Civil Appeal and that was not admitted. Going by what the Supreme Court held in the Sun Export Corporation case referred to above, an in limine dismissal of a Civil Appeal by the Supreme Court at the admission stage is not a binding precedent."
(viii) Reference is also placed on the case of Shanmugavel Nadar vs. State of Tamil Nadu reported at AIR 2002 SC 3484 and the decision in the case of Collector of Central Excise vs. Technoweld Industries: (2003) 11 SCC 798 held that dismissal of a Civil Appeal by a non- speaking order does not bar the Court from considering the correctness of proposition later. Hence, TATA Consultancy Services (supra) cannot be considered to be conclusive and final for the purpose of deciding the matter. The Appellant submits that the activity of IT Facility Management Services performed by them in the present case was only made taxable with effect from 16.05.2008 on the introduction of 'Information Technology Service' under Section 65(105)(zzze). Prior to the introduction of IT services, the Appellant's activities at the most could be considered as an activity under 'Business Auxiliary Service' ('BAS') under Section 65(105)(19). Referring to the Circular No. 62/11/2003-ST dated 21.08.2003 by CBEC wherein it was clarified that services inter alia in relation to designing, developing and maintenance of system in relation to operation of computer systems is covered Page 19 of 57 ST/429, 548, 549/2009 within the ambit of IT services mentioned in the exclusion of BAS and not taxable. This is in consonance with the Circular D.O.F. No. 334/1/2008-TRU dated 29.02.2008 wherein the Department of Revenue while clarifying the scope of service observed that IT software services provided for use in business or commerce shall be covered within the ambit of the proposed service of 'IT Software Service'. Thus, it is submitted that the service provided by the Appellant was not taxable till 16.05.2008, i.e. prior to the introduction of 'IT Software Service' in the Finance Act, 1994. Post 16.05.2008, the Appellant has duly amended their registration certificate to include IT services and have discharged service tax. In view of the above, it is clear that the services provided by the Appellant are in the nature of IT service, which being a new service was liable to service tax only with effect from 16.05.2008. Therefore, in view of settled law, it is submitted that the said service being a new service cannot be made liable to service tax under an old heading.
(ix) It is further claimed that since the Appellant obtained centralized registration from Bangalore on 14.09.2004, the Bangalore Service Tax Commissionerate had no jurisdiction to issue Show-cause Notice in respect of services provided by other branches of the Appellant for the period prior to 14.09.2004 and the demand of Service Tax pertaining to units falling outside the jurisdiction of Bangalore Service Tax Commissionerate deserves to be set aside on this ground alone.
(x) The learned Sr. Counsel further submits that invoking extended period of limitation under Section 73 on the Page 20 of 57 ST/429, 548, 549/2009 ground that the Appellant had not disclosed the nature of services rendered to the Department with an intention to evade the payment of duty is totally incorrect and baseless. It is stated that for the period from April 2002 to March 2006 is completely barred by limitation as they had submitted information, including their Trail Balance as on 31.03.2005 and 31.11.2005 wherein exemption had been sought for infrastructure management services. The knowledge of the Department is further made apparent by the audit report dated 31.03.2004 wherein query had been raised regarding non-payment of Service Tax on Facility Management Service. In view of the various correspondences, it cannot be disputed that the Department was not well aware of the activities of the Appellant and there cannot be said to be any suppression of information on the part of the Appellant. Further, it is settled principle of law that longer period of limitation cannot be invoked when there exist conflicting decisions on the same issue. In view of the same, longer period of limitation cannot be invoked. Reliance is placed on the decisions of Vodafone Cellular Ltd. v. Commissioner of Service Tax reported at 2019-TIOL-841-CESTAT-Bang. and Silver Lake Information Systems Pvt. Ltd. vs. Commissioner of Service Tax reported at 2019-TIOL- 3240-CESTAT-Bang. wherein this Hon'ble Tribunal in similar circumstances has held that since there existed conflicting decisions on the relevant issue, the demand shall be barred by limitation and extended period shall not be invoked. It is submitted that the Appellant has not contravened any provisions of the Act or Rules and penalty being penal in nature, cannot be imposed herein. Further, Page 21 of 57 ST/429, 548, 549/2009 it is settled law that simultaneous penalty under Section 76 and 78 of the Finance Act, 1884 cannot be invoked by the Department. Thus, the penalty deserves to be set aside on this ground alone.
6. Shri P. R. V. Ramanan, learned Special Counsel for the Revenue made the following submissions:
(i) According to M/s. IBM India (P) Ltd., the issue of classification of the services in question, for the period of dispute viz., 1/9/2003 to 1/5/2006, presents three alternatives in the following order: (a) Information Technology Service (ITS) excluded from 'Business Auxiliary Services' (BAS); (b) Business Support Service (BSS); and
(c) Consulting Engineer Service (CES). As per M/s. Wipro Ltd., for the period of dispute viz. April 2002 to March 2008, the services in question were covered under 'Information Technology Service' (ITS) which stood excluded from BAS. On the other hand, Revenue's stand is that none of these options are applicable and that the correct classification of the said services would be under 'Management Consultant Service' (MCS). The activities undertaken by M/s. IBM India (P) Ltd., are clearly enumerated in the impugned order and the same are in the nature of services engaged in managing the entire IT resources of their clients, from analysis to strategy to development and to implementation. Similarly, the activities undertaken by M/s. Wipro Ltd. clearly indicate that the same are in the nature of services engaged in managing the entire IT resources of their clients.Page 22 of 57
ST/429, 548, 549/2009
(ii) Referring to various technical literature it is submitted that Greiner and Metzger (1983) one of the early analysts of the management consulting industry, define management consulting services as "an advisory service contracted for and provided to organizations by specially trained and qualified persons who assist, in an objective and independent manner, the client organization to identify management problems, analyze such problems and help, when requested, in the implementation of solutions". Turner (1982), elucidates eight fundamental purposes of consulting assignments, arranged hierarchically as: "(1) providing information to a client (2) solving a client's problems (3) making a diagnosis, which may necessitate redefinition of the problem (4) making recommendations based on the diagnosis (5) assisting with the implementation of recommended solutions (6) building a consensus and commitment around corrective action (7) facilitating client learning that is, teaching clients how to resolve similar problems in the future, and (8) permanently improving organizational effectiveness." Milan Kubr, et al. "Management consulting is an independent professional advisory service assisting managers and organizations to achieve organizational purposes and objectives by solving management and business problems, identifying and seizing new opportunities, enhancing learning and implementing changes." The Management Consultancy Association of India defines Management Consulting 'as an advisory service contracted for and provided to business, public and other undertakings by specially trained and qualified persons. It is a process of interaction wherein the consultant, in an objective and Page 23 of 57 ST/429, 548, 549/2009 independent manner, diagnoses and investigates problems and issues concerned with management practices, analyses these, recommends appropriate action and provides assistance when requested in implementation of recommended solutions. Thus, 'Management consultancy' is defined as provision of analysis, advice, and assistance to managers in a variety of operational areas. With the advent of 'information technology', both management and management consulting have undergone significant transformation. But the fact remains that 'information technology', as its name itself suggests, is essentially an enormously effective tool which leverages the information that flows from the basic documents, which may be collectively called 'data' and enables the management in decision making. It is a major tool in many aspects of management consulting, playing a central role in such activities as, scenario analysis in strategic planning, customer data mining in marketing management and assembly line load balancing in operations management. Information technology is, thus, a tool which, with the help of technology resources, enhances the efficiency and effectiveness of any working system within an organization and in turn contribute towards the realization of the goals of the organization. It does not operate in a vacuum. It works on the methods and processes of various working systems in an organization.
(iii) In the case of Bharti Airtel, M/s. IBM India (P) Ltd., was engaged in transforming the entire process and procedure as the system that Bharti Airtel had at the inception of the contract was rudimentary. Such transformation called for gathering information and analysis of the same and Page 24 of 57 ST/429, 548, 549/2009 evolving a strategy based thereon initially for three years leading first to advice on process, application and operational transformation and thereafter, to design, development, and enhancements and implementation of solutions to address changes. The key attributes of Management Consulting, viz. "Analysis, Advice and Assistance" are very much incident in this case. Besides, the typical phases of a consultancy engagement are present in IBM's contracts. There is an introductory phase (entry, contact, contracting, defining the relationship); an analysis phase (diagnosis, data gathering, orientation, discovery and dialogue, options, selecting a setting, selecting a method of work); an advisory phase (response, identification, feedback and the decision to act, solutions); an assistance phase (exploration, engagement, implementation, action, intervention); and, finally, a concluding phase (disengagement, closure, resolution, extension, recycle, exit, termination).
(iv) The services rendered by M/s. IBM India (P) Ltd. to their clients were squarely covered within the scope of providing advice, consultancy and technical assistance, which is expected of a 'Management Consultant. In view of the above, the more appropriate classification of the services rendered by IBM is under 'MCS'. The same argument applies fully to M/s. Wipro Ltd., as the services rendered by both M/s. IBM India (P) Ltd., and M/s. Wipro Ltd., are very much comparable and in most of the cases they would have competed to get contracts from several clients.
(v) Coming to the second ground regarding the scope of legal provisions in relation to MCS under the Service Tax law, it Page 25 of 57 ST/429, 548, 549/2009 is stated that during the disputed period, "Management Consultant" read as follows:
"Management Consultant" means any person who is engaged in providing any service, either directly or indirectly, in connection with the management of any organization in any manner and includes any person who renders any advice, consultancy or technical assistance, relating to conceptualizing, devising, development, modification, rectification or rectification upgradation of any working system of any organization".
(vi) Referring to the Lordships observations, in the case of Black Diamond Beverages Ltd vs. CTO, it is argued that the definition will embrace only what is comprised within the ordinary, popular or natural meaning of the 'means' part together with what is mentioned in the 'includes' part of the definition. The inclusive part of the definition cannot prevent the main provision from receiving its natural meaning. The interpretation of 'means' part is in no way controlled or affected by the second part which includes' certain other things in the definition. The 'means' part of the definition is generic in nature and is of wide import. Also relied on the CBEC's Circular No. 1/1/2001-ST, dated 27-6-2001 [F. No. 177/2/2001-CX.4], where it is stated "In this regard, the Board had consulted the Indian Institute of Management, Ahmedabad for obtaining an expert opinion on the subject matter. They have opined that the term "Management" is generally understood to mean running the affair of an organisation in an organised and systematic manner. To be able to do this efficiently and effectively, management typically involves carrying out a host of activities, functions and tasks and at different Page 26 of 57 ST/429, 548, 549/2009 levels. Thus, management encompasses both strategic and operational level functioning and would include tasks such as planning, organising, staffing, directing, controlling and coordinating. Thus, management of any organisation involves carrying out a wide variety of clearly defined activities across a number of organisational sub-units in a coherent and coordinated manner. Since the expression "Management" is an inclusive term, 'management consultant' would also be equally encompassing expression and would include any adviser who renders services on any aspect of management."
(vii) The Learned Special Counsel vehemently argued that the two decisions in favour of Revenue rendered by two different Benches of the Hon'ble Tribunal in the case of
(i)Tata Consultancy Services Ltd. Vs. CST Delhi (2018 (18) GSTL 478- affirmed by Apex Court in 2018(18) GSTL 1127; and (ii) Tata Consultancy Services Ltd. Vs. CCE, Mumbai [2019 (6) TM1109-Tri- Mumbai] cannot be ignored only on the ground that it is not a binding precedent as the appeal was rejected at the admission stage as the Civil appeal filed by Tata Consultancy Service (supra) was refused admission with the following remarks:
"1. Heard the Learned Counsel for the appellant and perused relevant material.
2. We find no merit in this appeal. Admission is refused and the Civil Appeal is accordingly dismissed."
(viii) Rebutting the reliance placed on the Supreme Court's decisions by the appellants, it is submitted that in the case Shanmugavel Nadar (supra) cannot be accepted because Page 27 of 57 ST/429, 548, 549/2009 the Lordships therein had dismissed the appeal on a ground, totally different from the grounds urged in the Appeal relating to the constitutional validity of the relevant Act. Per contra, in the Tata Consultancy Service (supra) case, though the dismissal of the appeal was at admission stage, their Lordships had heard the counsel and perused the material and recorded a finding that there was no merit in the appeal filed by Tata Consultancy Service (supra) against the decision of the Tribunal. This points to the fact that there was due consideration of the merits of the case by the Hon'ble Supreme Court, quite contrary to the facts and law involved in the case of the Shanmugavel Nadar (supra). Similarly, in the case of Technoweld Industries case (supra), there is no finding that there was no merit in the appeal. Nevertheless, the Hon'ble Supreme Court proceeded to decide the issue on merits and the decision in the case of Sun Export Corporation (supra) stands overruled by the Hon'ble Supreme Court's decision in the case of Commissioner of Cus. (Import), Mumbai vs. Dilip Kumar & Company [2018 (361) E.L.T. 577 (S.C.)]. Further, it is submitted in the case of Hewlett Packard India Sales Ltd [ 2015 (38) STR (663)], the Tribunal did not consider whether similar services rendered by Hewlett Packard could be covered under the expression 'technical assistance' as dealt with in the Delhi Bench in the case of Tata Consultancy Service (supra). The said Tata Consultancy Service decision took a comprehensive view of the definition of the expression "Management Consultancy Service", while Hewlett Packard's (supra) decision did not and hence, not comparable. It is further Page 28 of 57 ST/429, 548, 549/2009 claimed that if Revenue's view, accepted by the Delhi Bench and Mumbai Bench is not concurred with, in two jurisdictions similar/identical services rendered by Tata Consultancy Service (supra) would attract the tax levy, while Bangalore Bench alone holds that such services rendered by M/s. IBM India (P) Ltd. and M/s. Wipro Ltd. will be out of Service Tax levy amounts to discrimination under the same Central Law.
(ix) Countering the appellants argument that the Delhi Bench decision in the case of Tata Consultancy Service (supra) is per incuriam since the Bench ignored its own observation in the case of Madhya Pradesh Police Housing Corporation Ltd. that the term 'technical assistance' shall draw colour from advice and consultancy, it is submitted that in the case of Madhya Pradesh Police Housing Corporation Ltd., the dispute was whether supervision of construction by the Corporation's employees who were officers of the Police department could be regarded as Consulting Engineer Services. The Hon'ble Tribunal has recorded clear-cut findings that the supervision charges paid to the appellant cannot be considered as consideration received for rendering Consulting Engineer Service inasmuch as the appellant's corporation is made up of officers on deputation from the Police Department and hence, are not professionally qualified engineers or an engineering firm and hence not covered by the definition of Consulting Engineer Service. Though mention of application of ejusdem generis appears in Para 8 of Tribunal's Order, these observations have to be seen in the context of the aforesaid paras which lay down the rationale underlying the decision. In view of the Page 29 of 57 ST/429, 548, 549/2009 above, it would not be correct to say that Delhi Bench's decision in the case of Tata Consultancy Service (supra) is per incuriam.
(x) Another argument advanced is that the principle of 'noscitur a sociis' would need to be applied to interpret the expression 'technical assistance' appearing in the definition of 'Management Consultant', it is argued that the definition of 'Management Consultant' is in the form of both 'means' and 'includes'; therefore, the definition is exhaustive. It is expansionary rather than restrictive as observed by the Hon'ble Tribunal in the case of Jubilant Enpro (P) Ltd. [ 2014(12) TMI 598-CESTAT New Delhi]. The interpretation of 'means' part is in no way controlled or affected by the second part which includes certain other things in the definition. The interpretation sought is with reference to the 'inclusive' part of the definition but in actual fact the 'means' part itself squarely covers the services rendered by the appellants. Without prejudice to the above submission, the application of the principle of 'noscitur a sociis' would arise only when the larger meaning of an expression could not have been intended given that the terms that accompany the subject expression would point towards a restriction on its larger meaning. In this regard, an excerpt from the judgment of the Apex court in the case of Rohit Pulp and Paper mills Ltd. vs. CCE: 1990 (47) ELT 491 (SC) is placed below:
The principle of statutory interpretation by which a generic word receives a limited interpretation by reason of its context is well established. In the context with which we are concerned, we can legitimately draw upon the "noscitur a sociis" principle. This expression simply means that "the meaning of a word is to be judged Page 30 of 57 ST/429, 548, 549/2009 by the company it keeps." Gajendragadkar, J. explained the scope of the rule in State v. Hospital Mazdoor Sabha (1960-2 S.C.R. 866) in the following words:
"This rule, according to Maxwell, means that, when two or more words which are susceptible of analogous meaning are coupled together they are understood to be used in their cognate sense. They take as it were their colour from each other, that is, the more general is restricted to a sense analogous to a less general. The same rule is thus interpreted in "Words and Phrases" (Vol. XIV, p. 207): "Associated words take their meaning from one another under the doctrine of noscitur a sociis, the philosophy of which is that the meaning of a doubtful word may be ascertained by reference to the meaning of words associated with it; such doctrine is broader than the maxim Ejusdem generis." In fact the latter maxim "is only an illustration or specific application of the broader maxim noscitur a sociis". The argument is that certain essential features or attributes are invariably associated with the words "business and trade" as understood in the popular and conventional sense, and it is the colour of these attributes which is taken by the other words used in the definition though their normal import may be much wider. We are not impressed by this argument. It must be borne in mind that noscitur a sociis is merely a rule of construction and it cannot prevail in cases where it is clear that the wider words have been deliberately used in order to make the scope of the defined words correspondingly wider. It is only where the intention of the Legislature in associating wider words with words of narrower significance is doubtful, or otherwise not clear that the present rule of construction can be usefully applied. It can also be applied where the meaning of the words of wider import is doubtful; but, where the object of the Legislature in using wider words is clear and free of ambiguity, the rule of construction in question cannot be pressed into service.
This principle has been applied in a number of contexts in judicial decisions where the Court is clear in its mind that the larger meaning of the word in question could not have been intended in the context in which it has been used."
(emphasis supplied) Page 31 of 57 ST/429, 548, 549/2009
(xi) Further, the learned Special Counsel stated that the changes introduced in the Finance Bill 2003 in Excise, Customs, Service tax made through communication D.O.F No.334/1/2003-TRU dated 28.02.2003 exempts computer enabled services and not computer technology resources management. The computer- enabled services is enumerated as data processing, networking, back-office processing, networking, back-office processing, computer facility management while the computer facility management here is in the context of computer enabled services. In this case of IBM India Pvt. Ltd. vs. CST, Bangalore: 2010 (17) STR 317 (Tri.-Bang.), the issue was whether implementation of ERP software, as distinct from ERP planning and advice, would get covered under MCS. Since Information Technology Software Services (ITSS), specifically covering Implementation of IT software was introduced with effect from 16.05.2008, the Hon'ble Tribunal took the view that prior to that date no Service Tax was payable on implementation of ERP software. The appeal filed by the Revenue was dismissed at admission stage by the Apex Court. It may, however be mentioned that the facts of the present cases of M/s. IBM India (P) Ltd. and M/s. Wipro Ltd., are very much distinguishable. The services rendered by them are not of the nature of implementation of IT software. The ratio of the decision of the Hon'ble Tribunal is, therefore, not applicable.
(xii) In the case of Intelligroup Asia Pvt. Ltd. vs. CCE, Hyderabad: 2016 (46) STR 679 (Tri.-Bang.), the Appellant was not a manufacturer or producer of ERP software but was engaged in the implementation of ERP packages with suitable customization, adaptation and upgradation. The Hon'ble Tribunal held that the activities Page 32 of 57 ST/429, 548, 549/2009 of the Appellant cannot be considered to be in the field of management to bring them under the category of MCS. Per contra, in the cases of M/s. IBM India (P) Ltd. and M/s. Wipro Ltd., the activities were in the nature of IT resource management and hence, the facts are not comparable at all. In the case of M/s. IBM India (P) Ltd., further, the services rendered had elements of advice and consultancy.
(xiii) With regard to whether the appellants services are covered under Business Auxiliary Services, it is argued that in order to get covered under BAS, IT Services should be those which are rendered in relation to any one of the services listed under S. No (i) to (vii) of the definition and any incidental or auxiliary service thereof. The contracts between M/s. IBM India (P) Ltd. and M/s. Wipro Ltd. and their clients do not fall under any of the categories listed there. The claim that the said services fall within the definition under the umbrella of BAS is therefore unsubstantiated. Secondly, w.e.f. 01.05.2006, i.e. after the amendment to the definition of MCS, M/s. IBM India (P) Ltd. has itself classified the said services as falling under MCS. This was because in their assessment, the services in question would be covered under 'Management of IT resources', which area of management was specifically mentioned in the definition of MCS w.e.f. 01.05.2006. Revenue's stand is fortified by the findings of the Hon'ble Tribunal in the case of Federal Bank Ltd. vs. AC C Ex., Calicut reported at 2009 (13) STR 569 (Tri- Bang), affirmed by the Kerala High court [2013 (29) STR 554(Ker) and by the Apex Court [2016 942) STR 418 (SC)]. Aforesaid decisions support Revenue's Page 33 of 57 ST/429, 548, 549/2009 submission that the definition of BAS is restrictive and exhaustive.
(xiv) With regard to the claim of the Appellant M/s. IBM India (P) Ltd. as Business Support Service, it is submitted that a perusal of the definition of "Support services of Business and Commerce" [Section 65(104c)] would show that the 'means' part merely indicates that the services provided should be in relation to business or commerce. None of the enumerated services covers the services rendered by M/s. IBM India (P) Ltd. Besides, services rendered by M/s. IBM India (P) Ltd. are not in the nature of 'transaction processing'. It is further contended by appellants that under BSS, the expression "Infrastructural Support Service" would cover the said services. The aforesaid expression is defined as "infrastructural support services includes providing office along with office utilities, lounge, reception with competent personnel to handle messages, secretarial services, internet and telecom facilities, pantry and security". In the instant case, M/s. IBM India (P) Ltd. provided these services at the premises of the clients utilizing clients' infrastructure including personnel.
(xv) The definition "consulting engineer means any professionally qualified engineer or an engineering firm who, either directly or indirectly, renders any advice, consultancy or technical assistance in any manner to a client in one or more disciplines of engineering". Thus, Consulting Engineer Service is clearly and only with reference to one or more disciplines of engineering. Information collected from M/s. IBM India (P) Ltd. reveals that the M/s. IBM India (P) Ltd. personnel who work under Page 34 of 57 ST/429, 548, 549/2009 the present contracts are not all of engineering background and the services rendered are also not purely engineering in nature. M/s. IBM India (P) Ltd. is a multi-disciplinary company and not a mere engineering firm. The contracts between M/s. IBM India (P) Ltd. and its clients, show that M/s. IBM India (P) Ltd. is involved in managing the entire IT resources including strategy, planning, development and implementation.
(xvi) The expression 'management consultant' is very wide in its import. According to Indian Institute of Management- Ahmedabad (IIM-A), it would include any adviser who renders services on any aspect of management. The literature on 'management consulting' acknowledges the diversification and expansion of this service is undergoing, mirroring the development of management and business and its challenges as also the need to adopt an integrated approach to their processes and procedures. The definition of management consultant for the period up to 01.05.2006, enumerated the advisory and consultancy functions/tasks normally performed by a management consultant, which corresponded to the functions of management, namely, planning, organising, staffing, directing, controlling and coordinating. The activities undertaken by M/s. IBM India (P) Ltd. and M/s. Wipro Ltd. are squarely covered under the main part of the definition of MCS. Further, even in terms of the inclusive part of the definition, the said activities fall within its scope, as the same encompasses all management issues relating to IT resources. Accordingly, it has been rightly held that the Service Tax on the services rendered by M/s. IBM India (P) Page 35 of 57 ST/429, 548, 549/2009 Ltd. and M/s. Wipro Ltd., to its clients was leviable even prior to 01.05.2006.
(xvii) With regard to limitation, the adjudicating authority has discussed the content of two letters addressed by M/s. IBM India (P) Ltd. to the department and has recorded a finding that they declared that the services rendered by them were in relation to 'designing, developing or maintaining of computer software or computerized data processing or computer networking or any other service primarily in relation to the operation of computer systems', whereas they were engaged in the management of the entire IT infrastructure environment, which included planning and devising of the system and its development, modification and upgradation. This constituted deliberate misrepresentation of facts and non-declaration of material particulars with intent to evade Service Tax. This is supported by the fact that they voluntarily paid Service Tax with effect from 01.05.2006 under the category of MCS accepting that they were engaged in the 'Management of IT resources'. Accordingly, he has held that invocation of extended period of limitation was justified. M/s. IBM India (P) Ltd. is a world-renowned company which has been a pioneer in combining management consulting with IT resource management. The fact that they had started paying duty under MCS from 01.05.2006 is itself an indication that in its own reckoning the services rendered amounted to MCS. Therefore, their letters to the department claiming exclusion under BAS as ITS constitutes deliberate misstatement and suppression of true facts. Similarly, in the case of M/s. Wipro Ltd., the adjudicating authority has observed that the nature of Page 36 of 57 ST/429, 548, 549/2009 actual activity was never brought to the notice of the Department and the fact came to light only after detailed investigation with reference to the agreements, which were not disclosed to the Department. He has accordingly concluded that there has been suppression of material facts which has led to non-payment of appropriate Service Tax. This is sufficient to invoke the extended period of limitation.
7. The common issues to be decided in these appeals is as follows:
(i) Classification of the services rendered by M/s. IBM India (P) Ltd. and M/s. Wipro Ltd. to their clients under the Service Tax entries, whether to be classified as Business Auxiliary Service / Consulting Engineer as claimed by the appellants or under 'Management Consultant Service' as claimed by the Revenue.
(ii) Whether the ingredients of suppression exists so as to demand Service tax for extended period.
8. With regard to jurisdictional issue, the Commissioner in the impugned orders has clearly stated that all pending issues or demands of Service Tax prior to Centralized Registration are to be adjudicated by the jurisdictional officer of Centralized Registration as per the CBIC Circular No.F.No.137/50/2007 CX-4 dated 16.03.2007. Therefore, there is no infirmity in the issuance of show-cause notice, since the detection and issuance of the show-cause notice occurred after 14.09.2004 when the appellants had Centralized Registration. Therefore we do not find any infirmity with regard to jurisdictional issue.
Page 37 of 57ST/429, 548, 549/2009
9. Coming to the merits of the case, the taxable category of 'Management Consultancy Service' and the definition of 'Management Consultant' during the disputed period which is relevant to both the appeals is extracted below:
prior to 01.05.2006 "Management Consultant" means any person who is engaged in providing any service, either directly or indirectly, in connection with the management of any organization in any manner and includes any person who renders any advice, consultancy or technical assistance, relating to conceptualizing, devising, development, modification, rectification or upgradation of any working system of any organization;
01.05.2006 to 30.05.2007 "Management consultant" means any person who is engaged in providing any service, either directly or indirectly, in connection with the management of any organization in any manner and includes any person who renders any advice, consultancy or technical assistance in relation to financial management, human resource management, marketing management, production management, logistics management, procurement and management of information technology resources or other similar areas of management"
From 01.06.2007 0nwards "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 organization or business in any manner and includes any person who renders any advice, consultancy or technical assistance, in relation to financial management, human resources management, marketing management, production management, logistics management, procurement and management of information technology resources or other similar areas of management. Form these definition at different time periods it is any person who is engaged in providing any service, either directly or indirectly, in Page 38 of 57 ST/429, 548, 549/2009 connection with the management of any organization in any manner and includes any person who renders any advice, consultancy or technical assistance, relating to conceptualizing, devising, development, modification, rectification or upgradation of any working system of any organization; later on included any person who renders any advice, consultancy or technical assistance, in relation to financial management, human resources management, marketing management, production management, logistics management, procurement and finally information technology became part of the definition.
Service Tax Appeal No. 429 of 2009
10. The undisputed facts are that M/s. IBM India (P) Ltd., is an Information Technology Company and they are mainly engaged in the activity of development of software for domestic clients as well as for overseas clients. They also provide services to their clients under 'Facility Management Services', 'Maintenance Services' and 'Consulting Services'. Based on some of the contracts/agreements entered into by the appellant, the Commissioner has extracted the activities performed by the appellant.
10.1 For instance, services rendered by the appellant to their client Bharti Tele-Ventures Ltd. are as follows:
❖ To prepare annual IT strategy, deploy and operate solution for present business requirement and future changes keeping in mind the business and regulatory requirements. ❖ To review vendors proposals, perform vendor management procurement, contract management and day-to-day management of delivery and quality control deliverables. ❖ Change management by taking into account cost/benefit associated with the change.Page 39 of 57
ST/429, 548, 549/2009 ❖ Installing, moving, commissioning and adding the required hardware and software components to the IT environment.
10.2 Similarly, the agreements in the case of Cadbury India Ltd. involves availability Management, Batch Management, Capacity Management, Change Management, Configuration Management, Inventory Management, Performance Management, Problem Management, Recovery Management etc. In addition to review vendor proposals, to facilitate existing and future systems compatibility with changing industry standards, to maintain contact with vendors providing data processing, to keep abreast and apprise Cadbury India Ltd. of the latest technological product development etc. 10.3 In the case of Whirlpool of India Ltd., in addition to information technology management and providing of hardware and software, the appellant reviews vendors proposals and as in the case of Cadbury India Ltd. keeps abreast and apprise Cadbury India Ltd. of the latest technological product developments etc. Similarly, in the case of Tata Iron and Steel Company Ltd., in addition to information technology service, Availability Management, Batch Management, Capacity Management, Change Management, Configuration Management, Inventory Management, Performance Management, Problem Management, Recovery Management etc. In addition to review vendor proposals, to facilitate existing and future systems compatibility with changing industrial standards. They also maintain contact with vendors providing data processing, telecommunications and end-user services for coordinating and managing Tata Steel Contracts with the vendor.Page 40 of 57
ST/429, 548, 549/2009 10.4 The Agreements also define each of these parameters undertaken by the appellant. Available Management is the process for coordinating the appropriate skills, information, tools and procedures required to manage the availability of interactive networks and their supporting hardware and software components. Batch Management is the process for controlling production batch work including the scheduling of resources and the processing of data and transaction. Capacity Management is the process for the development and maintenance of tactical and strategic plans to verity that the operating environments accommodate Cadbury's growing and changing business requirements. Configutation Management is the process for planning, testing, coordination, implementation and monitoring of changes, effecting of service delivery and the operating environments without adversely impacting the service delivery. Configuration Management is the process for processing hardware and software configuration changes and maintaining lists and diagrams of system configurations. Problem Management is the process for identifying, recording, tracking and correcting issues impacting service delivery, recognising recurring problems, addressing procedural issues and containing and minimising the impact of problems that occur.
10.5 From the above agreements and the terms that are explained above, it is clear that the appellant in addition to managing the information technology environment of their clients by providing hardware and software, they are also into Availability Management, Batch Management, Capacity Management, Change Management, Configuration Management, Inventory Management, Performance Management, Problem Management, Recovery Management etc. In addition to review of vendor proposals, to facilitate existing and future systems Page 41 of 57 ST/429, 548, 549/2009 compatibility with changing industry standards, to maintain contact with vendors providing data processing, to keep abreast and apprise their clients of the latest technological product/development etc. From the agreements it is seen that evolutionary changes, operational changes, IT Strategy changes and other major changes are part of the agreement. Under evolutionary changes, the appellant designs, deploys and operates a solution for its client for its current business requirements and its projected future growth as has been reasonably anticipated between them. Under operational changes all changes arising out of or in relation to the day-to- day operations will be documented and tracked through the operational change control procedure. Thus, it can be seen it is not mere information technology but overall management of their clients product strategy, their targets, vison and analytical methods used for their development keeping in view the latest technologies. There is no doubt that hardware and software is primarily used and their IT strategies are put in place for the overall development of the organisation. Therefore, it cannot be stated that these agreements are limited only to IT as claimed by the appellant, instead their activities/services rendered by them clearly fall under the category of 'Management Consultancy Service' as defined above.
10.6 In the appellants own case of IBM India Pvt. Ltd. Versus Commissioner of Service Tax, Bangalore, the Tribunal observed as follows: "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". Therefore, in view of Page 42 of 57 ST/429, 548, 549/2009 the undisputed admitted facts the appellant is liable to duty as Management Consultant.
Service Tax Appeal No.548 and 549 of 2009
11. Coming to the Agreements entered by M/s. Wipro Ltd., the appellant with M/s. Texas Instruments (India) Pvt. Ltd., Vijaya Bank and Export Credit Guarantee Corporation of India Ltd. etc., the following facts come to light.
11.1 The Agreement with Vijaya Bank, it involved Core Banking Solutions which involves Customisation, Implementation and Training of the core team, Enterprise Management System Software, Call Centre along with Help Desk Application Infrastructure Audit Tools, Security Applications, Budgeting and forecasting which involved performance of each unit, department and branch. Anti-Money Laundering Software which involves compliance and business intelligence system to enable the bank to design its' Know Your Customer (KYC) etc. On perusal of the invoices issued by M/s. Wipro Ltd. to Texas Instruments India Pvt. Ltd. (Invoice No.5106010282 dated 01.07.2005), with regard to Vijaya Bank (Invoice No.6106011273 dated 31.12.2006), ECGC (Invoice No.5105010255 dated 29.07.2005), it is also seen that the amount is collected for the activity undertaken by them which is described as Infrastructure Management Services. As discussed above, the definition of 'Management Consultancy' involves manging the organisation at various levels and overtaking the entire gamut of organisation of their clients and providing technical assistance at all levels of the organisation to their clients. The fact that IT technology was used to undertake these to manage the overall scheme of things does not in any way fall out of the scope of the definition of 'Management Consultancy Service'. The invoices very clearly Page 43 of 57 ST/429, 548, 549/2009 state that what was rendered was infrastructure management service and therefore, there is no doubt that the services fall under the category of 'Management Consultancy Service'.
12. The learned counsels have relied on various decisions to substantiate their arguments. Let's examine these decisions relied upon by the counsels.
12.1 Coming to the decisions relied upon by the Counsels in these appeals, it is seen that in all the cases relied upon by the appellants the issue was purely of information technology; it is either providing of the hardware or the software. None of these cases relied upon have dealt with the scope of the activities by them as is done in the present cases. As seen from the appellants Agreements, the scope of the work is elaborate and involves clients requirement, assessment, production and delivery, it even goes to the extent of advising their clients based on the latest technology, the strategy to be adopted to boost their production and to widen the scope of their market.
12.2 In the case of Intelligroup Asia Pvt. Ltd. Versus Commissioner of C. Ex., Hyderabad (supra), the observations were as follows:
"13. In view of the above, the following emerges :
(a) In the instant case, the appellants are not the "manufacturer/ producer" of ERP software. The appellants' clients procure ERP packages from the market and the appellants are involved basically in the implementation of ERP packages after suitably adopting the ERP software. Their work involved customizing the ERP package to suit the needs of individual clients and required utilizing skilled technical team and the skill required was in the field of engineering rather than in the areas of management such as finance, marketing, etc. They are also into upgradation of application software from existing release level to higher Page 44 of 57 ST/429, 548, 549/2009 version. They are also specifically into running of electronic data processing centre, business of data processing, word processing, etc. The advisory role, if any, is only in the field of Engineering and the services would fall under the category of consulting engineers only.
(b) It has not been shown that the appellants' team had necessary expertise in the field of management like financial management, human resource management, marketing management, production management, logistics management, etc. Without confirming the existence of such expertise, to conclude that they were rendering advice and consultation in such vital areas of management may not be appropriate. Therefore, the activities of the appellants cannot be considered to be in the field of management to bring them under the category of "management consultant"/ "management/business consultant".------
(d) The dispute before the Commissioner was whether the activities fall under the category of consultant Engineers service or fall under the category of "management consultant"/"management/business consultant". The demand has been made only on the ground that the services rendered by them fall under the category of "management consultant"/"management/business consultant" which decision has been held to be not sustainable. Therefore, the issue whether the activities could be treated as covered under 'Information Technology Services' which became taxable w.e.f. 16-5-2008 and consequently not taxable under any other category for the period prior to 16-5-2008 need not be gone into."
12.3 In the case of Ferromatik Milacron India Pvt. Ltd. vs. Commissioner of Service Tax, Ahmedabad (supra), the Tribunal was dealing with ERP services only as seen from their observations below.
"In view of the above judgments, it is settled that the ERP Service is clearly an information technology Service. The same being excluded from the Business Auxiliary Service cannot be charged to service tax under Business Auxiliary Service."Page 45 of 57
ST/429, 548, 549/2009 12.4 Hewlett Packard India Sales P. Ltd. vs. C.C.E., C. & S.T., Bangalore-LTU (supra) again the facts are entirely different as seen from the Tribunal's decision reproduced below.
"4. We have considered the submissions made by both the sides. The description of the services in the show cause notice itself would show that the appellants are actually managing services in the first category and in the second category the consultancy and integration is entirely relatable to hardware and software in information technology. The show cause notice itself states that under managed service, HP takes over the entire responsibility of managing, maintaining, improving upon the procurement and replacement of IT components so as to keep the IT environment functioning properly keeping in account the business requirement of the client."
12.5 In the case of IBM India Pvt. Ltd. Versus Commissioner of Service Tax, Bangalore (supra), the Tribunal observed as follows:
"4. As regards ERP planning and advice, the appellants are discharging Service Tax liability under the management consultancy services. This is not in dispute. However, with regard to the ERP implementation service, according to the Department, the said service would be liable to a tax under the category of management consultancy service, whereas according to the appellants, they would be taxable with effect from May 16, 2008 under the category of 'information technology software services' and not under the 'management consultancy service'.
5. .....
6. ......
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 Page 46 of 57 ST/429, 548, 549/2009 that prior to 16-5-2008, even the services rendered by the appellant were excluded from the scope of consulting engineer's service and also the judicial pronouncements made it clear that they would not be covered under the management consultancy services. 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.
(Emphasis supplied)
13. Now let's examine the decisions relied upon by the Revenue.
13.1 In the case of Tata Consultancy Services Ltd. Versus Commissioner of S.T., Delhi (supra), the Tribunal observed as follows:
"11. The second part the demand of Service Tax has been raised under the category of Management Consultancy Service. The appellant has entered into an agreement with the Department of Science and Technology (DST). Various activities were required to be carried out by the appellant under this agreement, towards Facility Management Services. The activity included those related to the operations of the computer systems; providing management services; providing technical service; management of computer facility and also providing systems software personnel for installment of software, managing user account, setting up and maintaining the network development of utilities etc. Revenue is of the view that the activities are covered within the definition of Management Consultancy Services. But the appellant has argued that they were responsible for entire operation of the facilities/system installed in DST through its own personnel. It is their submission that the definition of Management Consultancy Service does not include the actual management or executor functions but only covers rendering of advice, technical assistance and consultancy. They have also relied on various case laws.Page 47 of 57
ST/429, 548, 549/2009
12. Let us now examine the statutory definitions provided in respect of 'Management Consultancy Services'. During 16-10-1998 to 30-4-2006, the statutory definition read as follows : "'Management Consultant' means any person who is engaged in providing any service, either directly or indirectly, in connection with the management of any organization in any manner and includes any person who renders any advice, consultancy or technical assistance, in relating to conceptualizing, devising, development, modification, rectification or upgradation of any working system of any organization."
The definition underwent a change on 1-5-2006 and during 1-5-2006 to 1-6-2007, the revised definition read as follows :
"'Management 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, in relation to financial management, human resources management, marketing management, production management, logistics management, procurement and management of information technology resources or other similar areas of management."
The definition underwent a further change w.e.f. 1-6-2007 and the amended definition read as follows :
"'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, in relation to financial management, human resources management, marketing management, production management, logistics management, procurement and management of information technology resources or other similar areas of management."
Taxable service was defined in Section 65(105)(r) as - "any service provided or to be provided to a client, by a management consultant in Page 48 of 57 ST/429, 548, 549/2009 connection with the management of any organization, in any manner".
From the above definition, it can be seen that the definition consists of two parts. The first part says that any service either directly or indirectly in connection with the management of any organisation in any manner would be a management consultancy service. The expressions used in the definition, namely, 'means' and 'includes', 'either directly or indirectly', 'in connection with the management' and 'in any manner' are expressions of width and amplitude and includes in their scope any service in relation to the management of any organisation. The second part of the definition is the inclusive part which provides for rendering of any advice, consultancy or technical assistance in specific areas of management.
13. ............................. When we carefully consider the definition of Management Consultant as it existed during the different periods, it is evident that the appellant has not carried out management of any complete organization such as the DST. But what has been done is technical assistance in the operation of the computer systems of DST and management of the Centre. Such activities, definitely are liable to be covered within the terms 'Technical Assistance in relation to..... any working system of any organization. In the definition prevalent during w.e.f. 1-5-2006 to 1-6-2007, the activities performed by the appellant would be even more specifically covered under 'Technical Assistance in relation to ...... management of information technology resources'. In view of above we have no hesitation in holding that the activity performed by the appellant for DST would be covered within the definition of management consultancy services during the period of dispute.
14. The appellant has strenuously relied on the decisions of the Tribunal in the case of Basti Sugar Mills as well as Indian Hotels Company Ltd. (supra). We have carefully considered the said decisions but we find that in both the above decisions the issue was different from the one before us. In both the above cases the Tribunal had occasion to examine the liability of Service Tax in those cases where the entire management of a Page 49 of 57 ST/429, 548, 549/2009 company was outsourced to another. It was held in those cases that such activities are not covered by the definition of management consultant. But as discussed above, we are of the view that the activities carried out by the appellant as per the Facility Management Agreement for DST will fall within the definition of Management Consultancy Services and hence on merit levy of Service Tax is sustainable."
14. The present appeals are based on the Agreements as already discussed above and appellants are into various management services right from the primary targets to the end achievement of various goals of their clients through latest technology. The cases relied upon by the learned Counsels, the facts are entirely different as they deal with software packages and they do not discuss the matrix in relation to the Agreements as is the case before us. Therefore, as held by the Tribunal in the above case and as affirmed by the apex court there is no doubt that appellants are liable to pay Service Tax as 'Management Consultants'. It is also argued that the above decision is not binding as it was dismissed at the admission stage itself. As rightly argued by the Special Counsel for the Revenue, the Hon'ble Supreme Court's dismissal was not a mere simplicitor dismissal to be brushed aside. The apex court clearly held that 'having heard the Counsel and after perusal of the relevant material, we find no merit in the Appeal'. For the sake of clarity, the decision is reproduced below again.
"1. Heard the Learned Counsel for the appellant and perused relevant material.
1. We find no merit in this appeal. Admission is refused and the Civil Appeal is accordingly dismissed."
Therefore, we do not find any reason to not to hold this decision as a binding precedent especially when the other decisions relied upon the learned Counsels are clearly distinguishable on facts.
Page 50 of 57ST/429, 548, 549/2009
15. In the case of Tata Consultancy Services Ltd. vs. Commissioner of Central Excise ST(LTU) Mumbai: 2019 (6) TMI 109-CESTAT Mumbai dated 18.03.2019 observed as follows:
"4.3.2. Management Consultancy service a. 'Management Consultant' means any person who is engaged in providing any service, either directly or indirectly, in connection with the management of any organization in any manner and includes any person who renders any advice, consultancy or technical assistance, (relating to conceptualizing, devising, development, modification, rectification or upgradation of any working system of any organization.') substituted by phrase (in relation to financial management, human resources management, marketing management, production management, logistics management, procurement and management of information technology resources or other similar areas of management.) with effect from 01.05.2006.
b. As per the Agreement dated 15th January 2005, "HAlL has entered into contracts with its customer Tata Consultancy Services Ltd ("Customer) for the supply of smart card based physical access control solution, access controller/ readers and associated software ("Products") to the Customer ("Contract) and require the services of the Contractor to provide project management services including but not limited to on site job coordination, delivery and job execution scheduling, technical support on design of the solution and installation of the Products and related services thereto."
c. As per the Annexure-II-PO No 38167 dated 18/07/2005 (Purchase Order of Honeywell Automation India Ltd) following is scope of work assigned to appellant.
1. Technical Support and consultancy on design of smart card.
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2. Project Management, Scheduling and Delivery Coordination.
3. On sile job coordination for front availability and implementation infrastructure.
4. Develop customized interface software between Honeywell EBI and Ultimatix.
5. User acceptance Test support to HAll on solution developed.
6. Integration of solution developed with Ultimatix, CMC Biometric Solution and TCS smart card management system.
7. Work with Hail To stabilize the solution post implementation/ integration.
8. Work with hail for final acceptance test on the system developed.
c. From the scope of work as indicated above, Honeywell has contracted appellants to provide technical support and consultancy for developing a system of smart card for access control Access Control is part of management system of any organization and is also covered by the term "logistic management". Since these services have been provided for logistic management or access control system of the organization/ the services provided will qualify under the category of Management Consultancy Services.
d. Appellants have relied upon the decisions in case of 16 ST/87313,87572/2015 i. Hewlett Packard India Sales P Lid (2015 (38) STR 663 (T-Bang)] ii. Basti Sugar Mills Co Ltd (2007 (7) STR 431 (TDel)) iii. Valia Consultancy (2015 (38) STR 1175 (TMum)).
e. We do not find any support to the case of appellants from any of the said decisions. in case at interpreting the definition of Management Consultant as it existed prior to 1.05.2006, Tribunal held 4.1 It is worthwhile to reproduce the definition of "Management Consultancy Service at this Juncture. "Management consultant" means any person who is engaged in providing any service either directly or Page 52 of 57 ST/429, 548, 549/2009 indirectly, in connection with the management of any organization in any manner and includes any person who renders any advice, consultancy or technical assistance, relating to conceptualizing, devising, development, modification, rectification or upgradation of any working system in any organization. The definition underwent some modification subsequently but the sum and substance of the activities of the management as contemplated under the provisions of Finance Act are as under.
❖ Any service, either directly or indirectly, in connection with the management of any organization in any manner. ❖ Any advice, consultancy or technical assistance, relating to conceptualizing, devising, development, modification, rectification or upgradation of any working system of any organization. ❖ In either case, focus has to be made to the term "management consultant" as understood in the above statutory definition. In view of the test laid down therein the present case will fall within the category of Management Consultancy Services.
f. The test laid down in case at 'ii' is as follows:
"7. The above definition makes it clear that what is envisaged from a consultant is advisory service and not the actual performance of the management function. In the present case, the appellant was in-charge of the operation of the factory and thus was performing the management function."
This case lays down the test that Management itself cannot be management consultant. Since that's not the issue in dispute in present case we do not find that this decision is applicable.
g. The issue in consideration in decision at 'iii' was in relation to Consulting, Engineer Services and not Management Consultancy Service. Hence that decision to is distinguishable"
16. The Commissioner in the impugned order observed that the appellant M/s. Wipro Ltd. were rendering various Page 53 of 57 ST/429, 548, 549/2009 services as part of the facility management service like network management, computer infrastructure management, data management patch management, configuration management vendor management, monitoring uptime utilisation, troubleshooting operations etc. These services rendered by the appellant to their clients clearly fall into the category of 'Management Consultancy Service' as is defined and deliberated by the Tribunal in the case of Tata Consultancy Services (supra).
17. Similarly in the case of M/s. IBM India Pvt. Ltd., the Commissioner in the impugned order based on the various Agreements entered by the appellant clearly established that the appellant is into common pool of services namely Availability Management, Batch Management, Capacity Planning, Change Management, Inventory Management, Performance Management, Problem Management, Vendor Management, help desk services, data centre training, application management etc;
and these services cannot be limited to information technology services. In view of the above, we do not find any reason not to agree with the impugned orders classifying the services under 'Management Consultancy Service'.
18. With regard to limitation in Service Tax Appeal No.429 of 2009 in the respect of M/s. IBM India P. Ltd., it is submitted that the appellant had filed letters dated 09.02.2004 and 28.04.2004 stating that they were providing various services relating to designing, developing, maintaining of computer software, system networking, which related to IT services and were exempted in terms of the Board's clarification. The Commissioner in the impugned order observing that the Page 54 of 57 ST/429, 548, 549/2009 activities undertaken by the appellant were not related to IT services but actually related to management of a part of the work of their clients and the above letters did not reveal the actual activity undertaken by them. It is also alleged that various Agreements with their clients were never disclosed to department and these Agreements came to light only after detailed investigation undertaken by them. Based on the various decisions of the Tribunal, the Commissioner upheld the extended period of demand. These observations of the Commissioner fall flat in view of the fact that Revenue had issued Show-cause notices dated 22.09.2005, 03.05.2006 and 03.10.2006 which were issued for non-payment of Service Tax on 'maintenance or repair service' undertaken by them relating to enterprise resource planning software system, non-payment of service tax on intellectual property, respectively, clearly bringing out about the fact that Revenue was clearly aware of the various activities undertaken by the appellant. Moreover, in the appellant's own case, it is undisputed fact that Service Tax was being paid under 'Management Consultancy Service' and exemption was claimed only on ERP i.e. software packages. Therefore, we do not find any reason to uphold the demand beyond the normal period.
19. With regard to limitation in Service Tax Appeal No.548 of 2009 in respect of M/s. Wipro Ltd., the Commissioner while invoking the extended period of limitation held that the activity undertaken by the assessee was never brought to the notice of the department and it came to light only on detailed investigation after the perusal of the Agreements. It is also held that mere filing of ST-3 returns and payment of Service Tax without disclosing the actual nature of other activities undertaken by them does not negate the fact that the relevant Page 55 of 57 ST/429, 548, 549/2009 activities undertaken by them were suppressed. Per contra, the submission of the learned Sr. Counsel that the appellants had submitted their Trial Balance on 31.03.2005 and as on 30.11.2005 vide letter dated 12.12.2005 emphatically had stated that the appellant had claimed exemption on infrastructure management services cannot be ignored. It is also submitted that the appellant was not paying Service Tax on the above services was very well known to the Department as seen from the audit report dated 31.03.2004 which was followed by a detailed explanation vide their letter dated 19.04.2004. Therefore, the show-cause notice dated 24.09.2007 is partially time barred. These facts cannot be brushed aside because the audit conducted by the Revenue revealed that they were aware of the fact that various services were being rendered by the appellant. Having accepted their explanation in the year 2004, the Revenue cannot turn around and claim that the facts came to known only after DGGEI investigated the cases. Therefore, having not brought out anything on record and alleging suppression or misdeclaration of facts for invoking extended period cannot be sustained.
20. Summing up, in view of the above, the impugned orders are modified and upheld on merit and since there is no suppression of facts, invocation of extended period is not sustainable, therefore, the demands are to be restricted to normal period. Further, there being no justification for imposition of penalties, the same are set aside. Consequently, all the matters are remanded to Page 56 of 57 ST/429, 548, 549/2009 the Commissioner for redetermination of Service Tax for the normal period. Needless to say, that the appellants be allowed a reasonable opportunity to present their case in the de novo proceedings.
(Order pronounced in Open Court on 09.07.2024.) (D.M. MISRA) MEMBER (JUDICIAL) (R. BHAGYA DEVI) MEMBER (TECHNICAL) rv Page 57 of 57