2013 (7) TMI 910

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....onal INC, USA, later renamed as M/s Schenectady Specialties Asia Ltd. (SSAL in short). The appellant had 20% share holding in SSAL. From April, 1999 to October, 2001, the appellant handled the day to day work of M/s SSAL, such as accounts, marketing, finance etc. For these activities undertaken, the appellant received reimbursement of expenses as decided by the Boards of the both companies from time-to-time. During the period April, 1998 to October, 2001, the appellant recovered a sum of ₹ 1,68,89,250/- from M/s SSAL as consideration for the services rendered. The department was of the view that the services rendered by the appellant, M/s SSAL merits classification under 'Management Consultancy Services' and accordingly, issued a show....

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...., however did not posses an administrative and sales office. Therefore, their staff undertook the actual work of procurement, sales & marketing and the recovery was that of the expenses in the form of actual expenses incurred during the course of such. In other words, M/s Sunshield had undertaken to manage the affairs of marketing and administrative work of M/s Schenectady. Thus, M/s Sunshield has been running the organization of M/s Schenectady in India though they have separate manufacturing facility situated elsewhere in the state of Maharashtra. If M/s Schenectady had set up an own office then they would have required to employee the separate staff to run their administration and marketing set up. Further in order to deal with the vario....

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.... SSAL and the cost was shared between the appellant and M/s SSAL for this purpose. In other words, the administrative and sales services are executory functions and not management advisory or consultancy functions as per the definition of Management Consultancy Services. Therefore, this service does not come under the category of 'Management Consultancy Services'. (ii) The learned Counsel also relies on the decision of the Tribunal in the case of Glaxo Smithkline (supra) wherein it was held that services rendered towards publicity, freight, travelling, power and fuel, rent and miscellaneous expenses are not covered definition under definition of 'Management Consultancy Services' and the Service Tax is not liable under the said category. Th....

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....ithin the purview of 'Management Consultancy Services' or not? The Tribunal in the said case held that the agreement pertained to rendering of executory services and for sharing of cost towards the same and, therefore, the activity would not come within the purview of 'Management Consultancy Services'. It is the learned Counsel's submission that the ratio of the said decision would apply to the facts of the present case also. In view of the above, he prays for allowing the appeal. 4. The learned Addl. Commissioner (AR) appearing for the Revenue, on the other hand, strongly contends that in the joint venture agreement dated 25.2.1998 under clause (IV)(5), it has been provided as follows: - At the option of SII, general administrative se....