TaxTMI 
TaxTMI 
2022 (8) TMI 541
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....irection to the Bank to grant similar dispensation to M/s Group Chimique Tunisien (GCT). The said order was challenged by the appellant company before the Hon'ble High Court and the Hon'ble Supreme Court. In subsequent proceedings, the BIFR directed the appellants to resolve the settlement of outstanding dues with GCT and submit completion report to the Board and MA (SBI). Accordingly, the appellant entered into an agreement and appointed M/s Cotunace to mediate and get the matter settled with GCT for a mediation fee of USD 10,00,000/-, which was paid by the appellants to M/s Cotunace. The appellants deposited the service tax under the Head "Management Consultant's Service" on reverse charge basis under protest. The appellant felt that the fees paid to M/s Cotunace did not qualify under any category of taxable service and therefore, filed a refund claim for Rs.45,78,857/- on 16.03.2011. 2. The Department issued a show-cause notice proposing to reject the refund claim and the claim was rejected by the Order-in-Original and such rejection was upheld by the impugned order dated 20.02.2012. Hence, this appeal. 3.1 The Learned Chartered Accountant appearing on behalf of the appell....
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.... which involves controlling guiding or administering or conducting or directing affairs of such organisation and does not cover mere provision of a service in connection with the business of the organisation. The activity of management would encompass decision making activities required to run the business in an efficient manner. 3.4 In the present case, the contract between the Appellant and M/s. Cotunace for mediation services to settle outstanding dues payable by the Appellant to its supplier, GCT, was in pursuance to the Order of the BIFR. In terms of such Order, M/s Cotunace was to arrive at a settlement such that the pending disputes between the Appellant and GCT are resolved and arbitration between the parties is precluded. 3.5 At this juncture, a reference is made to the meaning of the term ' mediation' as defined under the Black's Law Dictionary (8th Edition), which states that mediation is "a method of non-binding dispute resolution involving a neutral third party who tries to help the disputing parties reach a mutually agreeable solution". 3.6 The concept of mediation has also been clarified in the Mediation Training Manual of India. Issued by the Mediatio....
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....his regard is placed on the judgment of Swaraj Mazda Ltd. Vs. CCE, Chandigarh 2013 (31) STR 205 (Tri.-Del). 3.10. It is further submitted that the Respondent has grossly erred in as much it has considered the activity of mediation to be similar to that of financial management of the Appellant, which is concerned with the planning and controlling of the firm's financial resources. In the present case, while the activity of mediation by M/s Cotunace no doubt leads to resolving a contractual dispute between the parties in relation to the outstanding dues, which ultimately has an impact on the finances of the Appellant, the aforesaid entry cannot be said to include each any every activity which has a financial implication on the business. Hence, the finding of the Respondent is grossly unsustainable and liable to be set aside. 3.11 Consequently, there is no basis for levy of Service Tax under the head "Management or Business Consultant Service" and the entire refund claim of the tax paid inadvertently is admissible to the Appellant along with interest thereon. The impugned order is liable to be set aside for this reason itself. 4. The learned Chartered Accountant for the appel....
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....agement. Learned authorised representative submits that from the above definition, it can be seen that the definition of management consultant is under two parts : the first part says that any service either directly or indirectly in connection with the management of any organization, would be eligible to be claimed management consultancy service and the second part i. e inclusive part, provides for rendering of any advice, consultancy or technical assistance in relation to the financial management etc, would constitute management consultancy service. 8. We find that the definition prima facie appears to be all encompassing. However, for the same reason one cannot jump to conclusion that it covers any service in connection with the organization in any manner. One has to look into the definition and the manner in which courts have interpreted the same. We find that the term management or business consultancy service or for that matter any consultancy would necessarily indicate work which is advisory in nature and not physical execution of the work. Moreover, the work done or advice so given should be in relation to management of any organisation or business like financial managem....
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....dia, as follows:- "1.4 Mediation in essence is an assisted negotiation process. Mediation addresses both the factual/ legal issues and the underlying causes of a dispute. Thus, mediation is broadly focused on the facts, law, and underlying interests of the parties, such as personal, business/ commercial, family, social and community interests. The goal of mediation is to find a mutually acceptable solution that adequately and legitimately satisfies the needs, desires and interests of the parties. 1.8 the mediator employs certain specialized communication skills and negotiation techniques to facilitate a productive interaction between the parties so that they are able to overcome negotiation impasses and find mutually acceptable solutions." 11. On going through the facts of the case and the contract we find that M/s Cotunace worked as middle man for settling the dispute, relating to the outstanding dues, between the appellant and M/s GCT . They have performed the actual act of mediation and their work did not end with mere advice or consultancy. The activity of the mediator i.e. M/s Cotunace cannot be said to fall under the category of management of business con....
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....ager from a management consultant, a performer from an advisor or a coach. That ocean exists in the present case also. We dealt with a similar case in Rolls Royce Industries Power (I) Ltd. (Supra) and held that where the agreement conferred operational autonomy and responsibility on the contracted party, the relationship is not one of consultancy. The ratio of that decision covers the present dispute also. There is no management consultancy in the facts of the present case and the demand is clearly beyond the scope of the statute. 13. On-going through the case law relied upon by the appellant, we find that case law supports the contention of the appellant. Tribunal in the case of K. R. Alloys Ltd. 2009 (13) S.T.R. 584 (Tri.-Bang.) observed that "4. We have carefully considered the submissions and have perused the definition of the term "Management Consultant. The term Management Consultant service, as already extracted, refers to any service provided to a client by a management consultant in connection with the management of any organization in any manner. The appellant is Limited Company, who is carrying on the activity of manufacture of MS Ingots, incidentally, they a....
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....onceptualizing devising, development, modification, rectification or upgradation of any working system of any organization. We have already enumerated the services rendered by the respondents. None of these has been shown to be a service rendered directly or indirectly in connection with the management of FISAF Again none of these services has been can to involve advice, consultancy, or technical assistance relating to conceptualization, devising, development modification, rectification or upgradation of any working system of the JV company. There is substance in the submission consultant that some of the services in question are covered by the definition of "Business Auxiliary Services which me to be introduced for levy of service tax w.e.f. 1-7-2003. The services in question were rendered in Oct 1999. The definition of "Management Consultancy has continued to be same even after introduction of "Business Auxiliary services for levy of service tax. It would, therefore, mean that a service appropriately classifiable as "Business Auxiliary Service cannot fall within the ambit of "Management Consultancy On this point, the respondents can legitimately claim sport from the Trib....