Custom, Excise & Service Tax Tribunal
M/S B.S.R. & Co vs Cst, Gurgaon on 9 October, 2012
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No. 2, R.K. Puram, New Delhi 110 066. Date of Hearing : 9.10.2012 Service Tax Appeal No. 1650 of 2011 [Arising out of Order-in-Appeal No. 258/BK/GGN/2011 dated 26.7.2011 passed by the Commissioner of Central Excise (Appeals), Delhi-III) For Approval & signature : Honble Ms. Archana Wadhwa, Member (Judicial) Honble Shri Mathew John, Member (Technical) 1. Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair copy of the order? 4. Whether order is to be circulated to the Department Authorities? M/s B.S.R. & Co. Appellants Vs. CST, Gurgaon Respondent
Appearance:
Appeared for Appellant : Shri N. Venkatraman, Sr. Advocate
Shri Vivek Sharma, Advocate &
Shri Sachin Jain, Advocate
Appeared for Respondent : Shri N. Pathak, A.R.
CORAM: Honble Ms. Archana Wadhwa, Member (Judicial)
Honble Shri Mathew John, Member (Technical)
Order No.dated.
Per Mathew John :
The appellants are engaged in the business of providing services in the capacity of a firm of Chartered Accountants. The services provided by the appellants inter alia, entails work relating to compliance with tax laws, such as tax computation, filing of returns, services relating to representation of clients before various government authorities etc. The appellants have been registered with service tax authorities for providing taxable service under the head for Chartered Accountants Services and has been duly discharging its service tax liability on services taxable under that head. However, the appellant was not paying service tax on fees charged for services rendered for complying with different types of laws in the country and also on representational services. Revenue was of the view that the appellant should have paid service tax for consideration received for such activities under the entry of Management Consultant Service made taxable under Section 65(105)(r) read with Section 65(65) of Finance Act 1994. Accordingly, a Show Cause Notice was issued demanding service tax on services rendered for the period 1.4.2007 to 31.3.2008. After adjudication a demand of Rs.39,30,039/- is confirmed against the appellant along with interest and penalty.
2. The counsel for the appellant submits that the definition of Management or Business Consultancy Service at Section 65(65) of Finance Act, 1994 will cover only services in the nature of a consultancy or advisory services and not every item of work got done by the management employing another agency. He further points out that this view that compliance related work will not be covered by Management Consultants Service was advised by Director General of Service Tax vide letter No. V/DGST/21-26MC/9/99 dated 28.1.99 and further reiterated in letter F.No. 341/21/99-TRU dated 20.8.99 issued by the TRU. Further the counsel points out that this matter came up for decision before the Tribunal in the case of M/s Ernst & Young Pvt. Ltd. Vs. CST, New Delhi in service Tax Appeal No. 320/2008 and the case was decided by the Bench by F.O No. ST/A/429/2012-Cus. dated 5.6.2012 holding that the impugned services will not be covered by the definition of Management Consultancy Service. Further he argues that out of the total demand of Rs.39,30,039/- an amount of Rs.31,22,136/- is attributable to representational work which is classifiable under Chartered Accountants Service and exempted under Notification No. 25/2006-ST. The appellant is not contesting an amount of Rs.3,53,832/- which they have already deposited along with interest of Rs.53,677/-.
3. The ld. A.R. for Revenue submits that the work for tax compliance is in the nature of advice and consultancy and would be appropriately covered by the definition of Management Consultancy Service. He also argues that any service directly or indirectly connected with Management will be covered by the definition at Section 65(65) of Finance Act 1994.
4. We do not see any reason why representational work exempted from Tax under Notification No. 25/2006- ST should be classified under Management Consultant Service and taxed. Though this issue was raised both before the adjudicating authority and the first appellate authority, both the authorities chose to ignore the contention and went by the argument that such services are classifiable under Management or Business Consultancy Service.
5. The Tribunal has been holding that only services in the nature of providing consultancy or advices for improving the Management of a business entity only will be covered by the definition and not executory type of responsibilities of management got done through another agency. For example collection of bad debts is a responsibility of a Management. If somebody is engaged for collecting bad debts the person engaged cannot be considered to be providing Management or Business Consultancy Services. Though the definition at Section 65(65) includes any service in connection with management of any organization, the scope of the definition gets restricted to services in relation to consultancy as is evident from the name given to the service and commercial understanding of the expression Management or Business Consultancy.
6. In the case of services for complying with the laws of the country it has been specifically ruled in the case of Ernest and Young (supra) that the service cannot be covered by definition at Section 65(65), because such services are executory in nature and not in the nature of consultancy or advice.
7. So we set aside the impugned order except to the extent of demand amounting to Rs.3,53,832/- and interest thereon which is not contested by the appellant. We are satisfied that short payment arose because of clerical errors. So no penalty is being imposed in the matter.
8. Appeal is allowed in above terms.
(Pronounced in Court) (Archana Wadhwa) Member (Judicial) (Mathew John) Member (Technical) RM