2008 (12) TMI 104 - AT - Service Tax

Appellant wins tax appeal citing Notification No.15/2002-ST, Show Cause Notice time limit exceeded

SRIDHAR & SANTHANAM Versus CCE & ST, CHENNAI

The Tribunal ruled in favor of the appellant, finding that the tax liability for services provided as a 'Management Consultant' and 'Man-power Recruitment ... Interpretation of amending notification - liability to tax on services rendered by the appellant-C.A. under the head “Management Consultant” and “Man-power Recruitment Agency” - Notification No.15/2002-ST dt. 01.08.02 amending the Notification No.59/98-ST dt. 16.10.98 – held that in absence of specific stipulation as regard to date of effect, amending notification is effective prospectively – therefore appellant is exempted u/not. 59/98, prior to amendment made by Not. 15/02 on 01.08.02 Issues:1. Liability to tax on services under 'Management Consultant' and 'Man-power Recruitment Agency'.2. Interpretation of Notification No.59/98-ST dated 16.10.98 and Notification No.15/2002 dated 1.8.02.3. Date of effect of Notification No.15/2002-ST.4. Sustainability of demand based on limitation grounds.Analysis:1. The Commissioner (Appeals) affirmed the liability to tax on services provided by the appellant as a firm of Chartered Accountants under the heads 'Management Consultant' and 'Man-power Recruitment Agency.' The original authority was directed to quantify the service tax liability for the relevant period. The Commissioner (Appeals) found the appellant not liable under the head Business Auxiliary Service but upheld the demand for other services. The appellant contended that their services were exempt under Notification No.59/98-ST dated 16.10.98.2. Notification No.59/98-ST exempted services provided by practicing chartered accountants, cost accountants, or company secretaries from tax liability for specific listed work. However, Notification No.15/2002 inserted an Explanation stating that services provided by these professionals falling under other taxable services as per Section 65 of the Act are not exempt. The dispute centered around the effective date of this Explanation and its impact on the liability of the appellant for services rendered as a 'Management Consultant' and 'Man-power Recruitment Agent.'3. The issue of the date of effect of Notification No.15/2002-ST was crucial. The Commissioner (Appeals) held that the notification was effective concurrently with Notification No.59/98-ST from its inception. However, the appellant argued that the Explanation should only apply prospectively from the date of its issue. The Tribunal analyzed the language of the notification and concluded that the Explanation took effect only from the date of its issuance. Consequently, the tax liability of the appellant for services provided during the disputed period could not be sustained.4. The appellant also raised the issue of demand sustainability based on limitation grounds. The appellant's representative highlighted that the Show Cause Notice was issued in 2004, after the relevant assessment for service tax liability had been completed by September 2002. Citing a circular, it was argued that past cases should not be reopened, and the demand was beyond the normal period after filing returns. The Tribunal agreed that the demand was barred by limitation in the absence of suppression of facts, and the appeal was allowed.In conclusion, the Tribunal ruled in favor of the appellant, holding that the tax liability for services provided as a 'Management Consultant' and 'Man-power Recruitment Agent' during the disputed period could not be sustained due to the prospective application of Notification No.15/2002-ST. Additionally, the demand was found to be unsustainable based on limitation grounds.