Verve Consulting Private Limited Vs Commissioner of Central Excise & Service Tax (CESTAT Kolkata)
CESTAT Kolkata held that data collection and analysis, manpower mobilization, liaison, training supervision cannot be classified under ‘Management Consultancy Service’ and hence demand of service tax set aside.
Facts- The Appellant is engaged in providing services as a Management Consultant. A Show Cause Notice was issued to them demanding Service tax of Rs. 13,02,318/- along with interest and penalty for the period 2000-01 to 2004-05. The demand of service tax along with interest and penalty was confirmed by the adjudicating authority vide the Order-in-Original. On appeal, the Commissioner (Appeal) upheld the demands, along with interest and penalty. Aggrieved against this impugned order, the Appellant has filed the present appeal.
Appellant alleges that the services rendered in the field of deployment of staff, software development, repair and maintenance, and public relation, etc. cannot be taxed under the category of management consultancy services. Development of mobile team, software development, repair, and maintenance, and providing public relation service, etc. does not come within the ambit and scope of management consultancy service during the material period.
Conclusion- Held that they provide a comprehensive range of services such as data collection and analysis, manpower mobilization, liaison, training supervision in addition to management consulting. These activities are not liable to be classified under ‘Management Consultancy Service’. The impugned order has classified the entire activity under management consultancy and demanded service tax.
Held that services rendered in the nature of software development provided by the Appellant was exempted from payment of Service tax in terms of Notification No. 16/2004-ST dated September 10, 2004. Accordingly, no service tax was payable on the amount received towards software development.
FULL TEXT OF THE CESTAT KOLKATA ORDER
The Appellant is engaged in providing services as a Management Consultant. A Show Cause Notice dated April 7, 2006 was issued to them demanding Service tax of Rs. 13,02,318/- along with interest and penalty for the period 2000-01 to 2004-05. The demand of service tax along with interest and penalty was confirmed by the adjudicating authority vide the Order-in-Original dated 14.05.2019. On appeal, the Commissioner (Appeal) upheld the demands confirmed in the said order vide O-i-A dated 04.12.2009, along with interest and penalty. Aggrieved against this impugned order, the Appellant has filed the present appeal.
2. In their Grounds of appeal, the Appellant made the following submissions:
(i) They provide a comprehensive range of services such as data collection and analysis, manpower mobilization, liaison, training supervision, management consulting, software development etc. Apart from above, they provide services under a consortium arrangement in the capacity of sub-contractor.
(ii) The Notice in this case was issued solely based on the audit objection raised by the AG (Orissa) during verification of Income Tax Returns, filed by them for the aforesaid period. The Notice neither states the date of scrutiny of such Income tax returns by the AG (Orissa) nor provides a copy the audit report to them. Purely on the basis of the said audit objection and without causing any independent enquiry to ascertain the correctness of the alleged short payment, the Notice was issued.
(iii) The entire demand was barred by limitation. For the Financial Years 2001-02 to 2004-05, the demand is clearly barred by limitation in as much as no allegation of willful suppression, mis-statement, fraud or collusion has been made in the SCN. It is a settled position of law that in the absence of any such allegation in the SCN, extended period of limitation cannot be invoked. In support of this contention, the Appellant relied on the following decisions:
