2009 (2) TMI 117 - AT - Service Tax

Appellate Tribunal rules in favor of APPIPL in service tax appeal

The Appellate Tribunal CESTAT, CHENNAI, allowed the appeal filed by M/s. Aparna Paper Processing Industry (P.) Ltd. (APPIPL) against the demand for ... Service Tax on Management Consultants - Lower Authority confirmed the demand on the basis that the ‘Management Fee’ accounted in the records of the assessee during the material period represented proceeds realised from its group concern towards management consultancy rendered - There is no finding as to the nature of the service rendered and if the same was taxable under ‘Management Consultancy’ - lower authorities found that the assessee had rendered taxable service without any reliable evidence to substantiate the same - There is no finding as to the activity inyolved and if the same was classifiable under ‘Management Consultant’ - In the circumstances, the impugned demand of tax, interest and the penalties imposed on APPIPL are held to be not sustainable. The impugned order is set aside and the appeal filed by APPIPL allowed. The Appellate Tribunal CESTAT, CHENNAI, in the 2009 case of M/s. Aparna Paper Processing Industry (P.) Ltd. (APPIPL) v. Commissioner of Central Excise, found that the appellant had accounted for receipt of 'Management Fee' from another group concern, M/s. Creative Polypack Ltd., during 2001-02 to 2002-03. The original authority demanded service tax of Rs. 2,20,000 along with interest and penalties under sections 76, 77, and 78 of the Finance Act, 1994, which was upheld by the Commissioner (Appeals). The appellant challenged the demand, arguing that the amount accounted for as 'Management Fee' is not taxable under 'Management Consultant' services. The Tribunal found that the lower authorities failed to substantiate that the appellant provided taxable 'Management Consultant' services, and there was no evidence to support this claim. The appellant contended that the activity could be classified under 'Business Auxiliary Services' (BAS), introduced after the material period. Consequently, the Tribunal held that the demand of tax, interest, and penalties on APPIPL were not sustainable, setting aside the impugned order and allowing the appeal filed by APPIPL. The appeal filed by the revenue was dismissed as it concerned the penal liability of APPIPL for rendering management consultancy during the material period.