2014 (11) TMI 584 - AT - Service Tax

Tribunal requires 20% pre-deposit for tax appeal, granting stay. Decision based on case complexity.

M/s. INFORMATION KERALA MISSION Versus COMMISSIONER OF CENTRAL EXCISE, CUSTOMS AND SERVICE TAX TRIVANDRUM

The tribunal directed the appellant to deposit 20% of the tax demanded as a pre-deposit to proceed with the appeal, granting a stay against recovery for a ... Waiver of pre deposit - Classification of service - Management or business consultancy service or business auxiliary service - Held that:- It would be difficult to come to a final conclusion as regards prima facie merit or the correct classification. The issue is debatable. The correct classification would require detailed consideration of the actual activities undertaken, the work awarded by local self-Government institutions to the appellants, terms of payments, terms of agreement and the nature of service provided, etc., which would require consideration of all the relevant details, some of which have not even been placed before us at this stage. It cannot be said that appellants have made out prima facie case in their favour since the work undertaken by them includes study of work done by local self-Government organizations, computerization thereof, customization of the software, implementation, training, etc., which would definitely can be considered as relatable to management activity of the Government. Therefore, we consider that if the appellant deposits 20% of the service tax demanded that would be sufficient for hearing the appeal. - Partial stay granted. Issues: Classification of services rendered by the appellant as management or business consultancy service for the purpose of service tax liability.Analysis:The case involved determining whether the activities undertaken by the appellant fell under the category of management or business consultancy service, leading to the initiation of proceedings for service tax demand. The appellant argued that they were assisting in the functions of the State and thus should not be liable to tax, contending that their activities aimed at computerizing local administration for increased efficiency. On the other hand, the AR highlighted the essential elements required for a service to be classified as management or business consultancy service and pointed out the comprehensive nature of the activities undertaken by the appellant, emphasizing the dominant nature of management consultancy in their services.The tribunal acknowledged the debatable nature of the issue and the need for detailed examination of various aspects such as the actual activities performed, agreements, and nature of services provided. While recognizing that some activities could be considered as part of government management, the tribunal found it challenging to reach a conclusive decision at that stage. Consequently, the tribunal directed the appellant to deposit 20% of the tax demanded as a pre-deposit to proceed with the appeal, granting a stay against recovery for a specified period. This decision was based on the complexity of the case and the requirement for further examination of relevant details to determine the appropriate classification of the services provided by the appellant.