2014 (9) TMI 252 - AT - Service Tax

Services not 'Management Consultancy' pre-2003. Tax demand unsustainable. Appeal allowed.

TATA AUTOCOMP SYSTEMS LTD Versus COMMISSIONER OF CENTRAL EXCISE, PUNE

TATA AUTOCOMP SYSTEMS LTD Versus COMMISSIONER OF CENTRAL EXCISE, PUNE - 2015 (37) S.T.R. 252 (Tri. - Mumbai) Issues:Classification of services under 'Management Consultancy Service' for the period prior to 01/07/2003.Analysis:The appeal challenged an Order-in-Original confirming a service tax demand against the appellant for the period 01/04/2001 to 30/06/2003 under 'Management Consultancy Service' along with interest and penalty. The appellant argued that they provided various support services, not consultancy, and had already classified services as 'Business Auxiliary Services' post-01/07/2003, which the department accepted. The appellant contended that their activities were in the nature of Business Auxiliary Services, involving liaison work, training, and support for administration, not consultancy. They highlighted that the consideration received was based on a percentage of net sales turnover, indicating a commission-based payment, not typical of management consultancy services. The appellant cited tribunal decisions supporting their stance.The Revenue argued that the services provided by the appellant should be classified as technical assistance falling under 'Management Consultancy Service,' citing a tribunal decision where executory functions incidental to advisory functions were classified as such. They contended that since the appellant was providing executory functions, the classification under 'Management Consultancy Service' was appropriate.The Tribunal analyzed the services rendered by the appellant and their agreements with clients, noting that the appellant provided administrative support services without offering advice on organizational management. The services primarily involved support for clients' business operations, such as marketing assistance, obtaining loans, liaising with government agencies, and training personnel. The Tribunal found that these support services did not align with consultancy services, let alone management consultancy services. They distinguished the Revenue's reliance on a previous tribunal decision involving advisory services in financial management, emphasizing that the present case did not involve similar facts. Therefore, the Tribunal concluded that the services provided by the appellant before 01/07/2003 did not fall under 'Management Consultancy Service,' rendering the demand unsustainable in law. As a result, the appeal was allowed, setting aside the impugned order.