2005 (7) TMI 25

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.... Ltd. formerly known as M/s. Glaxo India Ltd., a company registered is an appellant in this case. They are engaged in the manufacturing & sale of drugs, pharmaceuticals, fine chemical diagnostic & animal teed supplements. They along with M/s. Burrough Wellcome India Ltd. another company hereinafter referred to as BWIL for short are independent subsidiary of Glaxo Wellcome Pvt. Ltd. (now known as Glaxo SmithKline Service Pvt. Ltd.) UK, pending a formal merger of BWIL & appellants, to be carried out fully. BWIL is also engaged in the manufacture & sale of wide range of drugs & pharmaceutical products. The joint operation costs incurred by the appellant for BWIL are allocated & reimbursed as per an agreement. 2. Pursuant to verification of ....

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....r Section 76, a penalty of Rs. 1,000/- under Section 77 for non-filling of ST-3 return along with interest @ 24% to be paid for delay as per Section 75 of that Act. The Commissioner (Appeals) confirmed the order of the lower authority. Hence this appeal. 3. After hearing both sides and considering the material submissions it is found - (a)   The plea of the appellant of being in the business of manufacture & sale of drugs/pharmaceuticals & carrying out of certain day-to-day activities for BWIL, a group company and not a client, without receipt of fee or professional charges for the same & being compensated in actuals will not render them "Management consultant" would ipso facto is not exempt them from the visit of Service Ta....

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....dgeted turnover for each team. Further, cost of the staff members in Glaxo payroll, working involving exclusively for BWIL, had not been directly cross charged. The gratuity & leave encashment benefit pertaining to the field force staff working for BWIL had not been cross charged. However these amounts were not expected to be material. These charges therefore are executory costs and not advisory costs for marketing the products of BWIL. CBEC vide circular dated 27-7-2001 has clarified that the intention is to Tax the Advisory Services provided by the consultants, and not the Executory Services provided by a contractor. The staff costs as incurred & reimbursed for 8 teams in marketing exclusively for BWIL, as ably presented by the ld. DR, wo....

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....made by the ld. Advocate that the nature of the Executory Services provided by the Marketing Team Staff would more appropriately fall under 'business auxiliary service" & not "Management Consultancy service" as the definition of Management Consultancy Service remains the same even after the levy of inclusion & of Service Tax on "business auxiliary service" in the year 2003. When an existing Tariff definition remains the same, then the introduction of new Tariff entry would imply that the coverage under the new Tariff for purpose of Tax is an area not covered by the earlier entry. The new entry is extension of the scope of coverage if Service Tax and not carving out of a new entry, from the erstwhile entry of "Management Consultancy Service"....