No bar on CA giving Business Consultancy for Export: CESTAT

Bharat Mines & Minerals Vs Commissioner, Central Goods & Service Tax, Customs & Central (CESTAT Delhi)

I find that the invoices in question were issued by the Chartered Accountant- Anuj Maheshwari and Company, copy of which is available in the appeal record. The invoices reads as ‘professional consultancy for export against export consignment as per details, giving the export invoice number, date and quantity etc.’ Further, Service Tax has been charged by the Consultant and it is undisputed that such invoices were paid along with service tax.

I find that there is no bar by a professional Chartered Accountant in giving business consultancy for the purpose of export. I further find that the Commissioner (Appeals) has travelled beyond the scope of Show Cause Notice rejecting the appeal on a new ground i.e. Chartered Accountant in practice cannot give consultancy for export. I hold that the appellant is entitled to rebate on the Service Tax paid on the consultancy bill, for consulting the Chartered Accountant. Accordingly, the impugned order is set aside and the appeals are allowed.

FULL TEXT OF THE CESTAT DELHI ORDER

The appellant M/s. Bharat Mines and Minerals, Haldwani is manufacturer of Soap Stone (falling under chapter heading 25161020 of CETA, 1985) chargeable to nil rate of duty of excise.

The appellant is not registered under the Central Excise Rules, 2002 or the Service Tax Rules, 1994. However, the appellant had been issued a service tax code in terms of Clause (e ) of para 3 of Notification No. 41/2012-ST dated 29.06.2012. The appellant is a regular exporter of soap stone, and has been claiming rebate of service tax paid on specified services used in the export of soap stone.

2. That the appellant has filed three appeals arising out of the single Order-in-Appeal No. DDN/EXCUS/000/APP/18-20/2019-20 dated 10.6.2019 as detailed below:

Appeal filed by the appellant before the Commissioner (Appeals) against the respective Orders-in-Original, had been disposed vide the above cited common Order-in-Appeal and appeals with reference to the amounts in dispute (column 3 in the above table) have been rejected by the Commissioner (Appeals).

3. That the Original Authority had rejected rebate claims on the ground that the activities of the received services had no nexus with export consignment, instead the endeavour of the appellant took place much before any of the export orders were received by the exporter, and the said activities did not require any repetition on regular basis. Therefore, the services had not been used beyond factory gate or any other place or premises of manufacture.

4. That in earlier round also the rebate claims had been rejected by the Original authority and the Commissioner (Appeals) on the same ground. The appellant had filed Appeals No. ST/52976/2018 (SM), ST/52977/2018 (SM) and 529978/2018 (SM). The said appeals were allowed by the Hon’ble CESTAT vide Final Order No. 51654-51656/2019 dated 26.11.2019.

5. That the Commissioner (Appeals), while deciding the appeals filed by the appellant against the three Orders-in-Original mentioned in column 5 of the table in para 2 above, has made out a new case and has rejected appeals of the appellant on a new ground, that the invoices had been issued by Anuj Maheshwari & Co. a Chartered Accountancy firm for ‘professional consultancy’ for export, that as per clause 11 of Part I of the First Schedule to Chartered Accountants Act, 1949 as amended, a Chartered Accountant could not engage in any business or occupation other than that of Chartered Accountancy, unless permitted by the Council so to engage; that the work claimed to be undertaken in this case is that of commission agent; that a Chartered Accountant holding certificate of practice could not provide such services; that this was professional misconduct under the Chartered Accountants Act, 1949; and that professional consultancy services in relation to export could not be classified as services of Chartered Accountants.

6. The Commissioner (Appeals) appears to be adjudicating a case of misconduct by a Chartered Accountant under the Chartered Accountants Act, 1949. The Commissioner (Appeals) has decided the appeals on a ground which was not there before the Original Authority or in the Show Cause Notice. The impugned order is contrary to law and is not sustainable and is liable to be set aside. In this regard, the appellant relies upon the orders of this Tribunal in the following cases:

(i) Curekraft Chemicals Pvt Ltd. vs. CCE reported in [2009 (247) ELT 506 (Tri)]; and

(ii) Basawa Technologies Ltd. v Commissioner of Customs, reported in [2017 (352) ELT 227 (Tri)].

7. That with effect from 01.06.2012, a proviso was added at the end of section 65 (which had defined various service before coming into force of the negative list regime) of the Finance Act, 2012 which reads as follows:

“Provided that the provisions of this section shall not apply with effect from such date as the Central Government may, by notification, appoint.”

The Central Government had appointed the date referred to in the above proviso as 01.07.2012, vide Notification No. 21/2012-ST., dated 05.06.2012. Therefore, with effect from 01.07.2012 all the taxable services known by their name had become inapplicable, in the negative list regime. There was no more any service known as ‘service provided or to be provided to any person by a practising chartered accountant in his professional capacity, in any manner’. Moreover, with effect from 01.07.2012, the definition of taxable service under section 65 B(51) of the Finance Act, 1994 read as under:

(51) “taxable service” means any service on which service tax is leviable under section 66B;

Section 66B ibid is reproduced below:

“SECTION [66B. Charge of service tax on and after Finance Act, 2012. —There shall be levied a tax (hereinafter referred to as the service tax) at the rate of [fourteen per cent.] on the value of all services, other than those services specified in the negative list, provided or agreed to be provided in the taxable territory by one person to another and collected in such manner as may be prescribed.”

With effect from 01.07.2012, definition of service under section 65B(44) reads as under :

“(44) “service” means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include—

xxxxxx”

8. Therefore, with effect from 01.07.2012, any activity carried out by any person(a Chartered Accountant in the present case) for another person for consideration, was a service and it was a taxable service if it was provided in the taxable territory, and was not specified in the negative list. Notification No. 41/2012-ST., dated 29.06.2012 referred to such taxable service and was not concerned about any professional service provided by practising Chartered Accountant to any person. The Commissioner (Appeals) cannot read inapplicable provisions of section 65 ibid. into the subject notification. Any person (including a Chartered Accountant) could provide service with reference to export of goods to another person for consideration. The impugned order is contrary to law, arbitrary and is not sustainable and is liable to be set aside.

9. That in view of the above submissions, it is prayed that the appeals of the appellant may be allowed with consequential relief and rebate claims of the appellant may be ordered to be paid.

10. Learned Departmental Representative Ms Tamnna Alam relies on the impugned order.

11. Considered the rival contentions and facts on record. I find that the invoices in question were issued by the Chartered Accountant- Anuj Maheshwari and Company, copy of which is available in the appeal record. The invoices reads as ‘professional consultancy for export against export consignment as per details, giving the export invoice number, date and quantity etc.’ Further, Service Tax has been charged by the Consultant and it is undisputed that such invoices were paid along with service tax.

12. I find that there is no bar by a professional Chartered Accountant in giving business consultancy for the purpose of export. I further find that the Commissioner (Appeals) has travelled beyond the scope of Show Cause Notice rejecting the appeal on a new ground i.e. Chartered Accountant in practice cannot give consultancy for export. I hold that the appellant is entitled to rebate on the Service Tax paid on the consultancy bill, for consulting the Chartered Accountant. Accordingly, the impugned order is set aside and the appeals are allowed.

13. The adjudicating authority is directed to grant the rebate amount forthwith within a period of 45 days from the date of receipt of this order, along with interest as per Rules.