Service Tax on Merger and Acquisition Services not leviable before 16th July 2001

Full Text of the High Court Judgment / Order is as follows:-

1. We are disposing of the above Appeals preferred by the Revenue by this common order and judgment. The above Appeals have challenged the impugned orders passed by the Customs, Excise and Service Tax Appellate Tribunal, Mumbai (for short “Appellate Tribunal”) dated 3rd February 2016 in Central Excise Appeal No. 3 of 2017 and 11st January 2016 in Central Excise Appeal No. 27 of 2017 respectively. Both of the impugned orders have answered the issue as to service tax being payable on “Merger and Acquisition Services” prior to 16th July 2001 under the category of “Management Consultancy Services” in the negative. For the sake of convenience we are referring to the facts in Central Excise Appeal No. 3 of 2017.

2. The Respondent / Assessee is engaged in professional advisory / consultancy services, corporate advisory services, financial advisory services and consulting services in relation to “Merger and Acquisitions” to various customers / clients. The Respondent had provided these services without obtaining service tax registration and had not paid service tax on the amounts received by them from their customers /clients for the said services. The Appellant classified the said services as taxable services under Management Consultancy Services and issued show cause notice dated 10th April 2006 to the Assessee to show cause why service tax amounting to Rs.37,69,113/- for the period October 2000 to November 2001 under the provisions of Section 73(1) of Finance Act, 1944 is not payable by the Assessee. The Adjudicating Authority vide order dated 29th July 2008 held the services provided by the Assessee to be taxable under Management Consultancy Services and demanded service tax of Rs.37,69,113/- along with interest and penalty under the provisions of the said Act. The Assessee preferred an Appeal before the Commissioner (Appeals). By order dated 31st January 2011, the Commissioner (Appeals) upheld the order of the Adjudicating Authority but waived the penalties imposed under the provisions of the said Act in view of Section 80 of the Finance Act, 1944. The Assessee preferred an Appeal before the Appellate Tribunal By the impugned order dated 3rd February 2016, the Appellate Tribunal allowed the Appeal of the Assessee. The Appellant has challenged this impugned order.

3. Mr. Jetly, learned counsel appearing for the Appellant in both the Appeals has contended that service tax is payable on Merger and Acquisition Services prior to 16th July 2001 under the category of “Management Consultancy Services”. Mr. Jetly relied upon a board circular No. 1/1/2001-ST (Section – 37-B) dated 27th June 2001, which was issued for taxable services and point No.10 of which reads thus:-