Statistical report preparation for a joint venture partner was not Management Consultancy Service under the tax law.

Preparation of statistical reports for a joint venture partner under a joint operating arrangement was not service in connection with the management of an organisation. The definition of Management Consultant then covered advice, consultancy or technical assistance relating to conceptualising, devising, development, modification, rectification or upgradation of a working system, but the appellant's activity was limited to compiling production and expense statistics for the partner. On that plain reading, the work did not fall within Management Consultancy Service under the Finance Act, 1994, and the service tax demand was unsustainable.

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Issues: Whether preparation of statistical reports by the appellant for the joint venture company amounted to taxable Management Consultancy Service under the Finance Act, 1994.

Analysis: The appellant and the joint venture partner had entered into a joint operating arrangement for oil and gas exploration and production. Under that arrangement, statistical reports relating to production and expenses were to be prepared and, since the joint venture partner did not prepare them itself, the work was assigned to the appellant against monthly charges. The definition of Management Consultant at the relevant time covered service connected with the management of an organisation, including advice, consultancy or technical assistance relating to conceptualising, devising, development, modification, rectification or upgradation of a working system. On a plain reading, preparation of statistical reports for another party did not amount to service in connection with the management of that organisation.

Conclusion: The activity was not taxable as Management Consultancy Service and the demand could not be sustained.

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