TaxTMI 
TaxTMI 
2024 (6) TMI 306
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....2009 (ii) I confirm demand of interest on the amount of service tax as confirmed above and order to pay the same under the provision of Section 75 of the Finance Act,1994 (iii) I impose a penalty of Rs. 10,000/- (Ten Thousand Only) under section 77(a) & (b) of Finance Act, 1994, ibid for their acts of omission and commission as mentioned in the preceding paras. (iv) I also impose a penalty of Rs. 7,64,09,507/-( Rupees Seven Crores Sixty four Lakhs nine thousand five hundred seven only ) under section 78 (1) of Finance Act, 1994 for their various acts of omission and commission as mentioned in the preceding paras. 2.1 Appellant is renowned Law Firm engaged in providing all kind of legal services in different fields of various laws such as compliance with relevant laws, assistance in filing various returns and forms under various laws etc. to its clients. 2.2 Prior to 01.09.2009, legal services were not subject to Service Tax under Finance Act, 1994. Therefore, the appellant was not registered with the Service Tax Department as its services were not exigible to Service Tax. However, w.e.f. 01.09.2009, a new category of service i.e. "Legal Consultancy ....
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.... (b) Section 68 of the Finance Act, 1994 read with Rule 6 of Service Tax Rules, 1994- They have contravened Rule 6 in as much as they have never made payment of service tax during the period April' 2007 to August 2009. (c) Section 69 of Finance Act, 1994 read with Rule 4 of Service Tax Rules 1994 in as much as they failed to make application for registration during the period April'2007 to August'2009. (d) Section 70 of Finance Act, 1994 read with Rule 7 of Service Tax Rules, 1994 in as much as they have never filed ST-'3 returns to the department during the period April'2007 to August'2009 2.5 The nonpayment of service tax was unearthed by department by causing investigation against them, hence, the provisions of Section 73(1) of Finance Act,1994 for extended period of limitation was invokable and the service tax amount determined is recoverable from party interest at appropriate rate on the said amount of service tax and education cess under the provisions of section 75 of Finance Act, 1994 was also recoverable. 2.6 Appellant for the contraventions have rendered themselves to penal action under section 76 &....
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.... of service tax on "Legal Consultancy Services" has introduced from 01.09.2009 therefore, it will have no retrospective effect. As per the said definition of management and business consultant, any service provided by a management or business consultant in relation to management of any business or organization shall be covered under the ambit of this category. From the definition, it is evident that in order to qualify as a "Management or Business Consultant/ Management Consultant", a person must provide services which are in relation to management of any business or organization and it also includes any person who is rendering advice, consultancy or technical assistance in relation to:- Financial Management Human Resource Management Marketing Management Other Similar areas of Management without specifying and proving the provision of any service, impugned order confirmed the demand against the appellant on the Gross Value as per P & L A/c. The onus to prove the provision of service while proposing and confirming the demand lies on the Department which they have failed to do. Reliance is placed on the decision of Hon....
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....ment or Business Consultant Services' defined under section 65(65) of Chapter V of the finance Act,1994. 23. The party's main contention is that being a law firm, the activities of Fox Mandal relate to legal advice and purely concerned with field of law and they have not provided any service in respect of commercial and canonic aspects of activities undertaken by our clients. To examine the party's contention, with respect to the allegation made in notice to show cause, it is essential to consider the activities undertaken b them and to test these with respect to relevant statutory provisions. 24. To consider the activities undertaken by the party, it is essential to party's operational area, as detailed in their broacher (RUD-5A) includes, banking firms and finance, (including project finance, capital markets consider and mutual funds,) initial public offerings, insurance, commercial disputes property law and conveyancing , corporate and commercial law, energy (including coal, oil and gas ), mining , telecommunications, intellectual property partnership, testamentary , air law (including aircraft leasing), shipping taxation, direct and dispute res....
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....mpany, in complying with the statutory requirements (iv) Documentation - Counsels at FML have extensive experience in structuring and negotiating the relatively complicated documentation involved in M&A. We have vast experience in formation of companies private as well a s public and we have formulated and drafted various documents like the Articles of Association, Memorandum of Association Technology Transfer Agreements, Shareholders Agreement, Joint Venture Agreement etc. The firm also provides requisite legal support in negotiating and finalization of the document required to close the deals The firm has a team of experts who negotiate and provide requisite legal support in closure of the transactions, including reviewing and advising on closing documents (v) Permissions and Approvals - FML advise its clients on the requisite approvals and permissions under the prevailing corporate laws and assists the client in processing the same with the concerned bodies viz RBI,FIPB & seeking sector specific approvals (vi) Tax Issues - FML's core M&A team also includes tax experts to advise the clients on tax planning and other related issues (vii) Pos....
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....t the services of Management Consultant Services were brought into the Service tax net with effect from 16.10.1998 vide notification No. 53/98-ST dated 07.10.1998 and the same was rechristened as "Management or Business Consultant Services" with effect from 01.06.2007. As per section 65(65) of Chapter V of the finance Act, 1994 "Management or business consultant" means any person who is engaged in providing any service, either directly or indirectly, in connection with the management of any organization or business in any manner and includes any person who renders any advice, consultancy or technical assistance, in relation to financial management, human resources management, marketing management, production management, logistics management, procurement and management of information technology resources or other similar areas of management" In terms of Section 65(105) (r), Taxable services means any service provided or to be provided to a client (to any person with effect from 16.052008), by a management or business consultant in connection with the management of any organization or business, in any manner. 29. As above the scope and coverage is very wide. I obser....
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.... services rendered by any adviser or consultant may include one or more of the following specific components or activities These may either be on the buy-side transaction assisting companies to acquire or on the sell-side assisting companies to divest, resulting into merger, acquisition or other forms of organizational restructuring:- (a) Strategic review and establishing strategic rationale for merger or. acquisition; (b) Performing financial and business analysis; (c) Target screening, identification and evaluation; (d) Financial analysis and valuation of target company or merging companies, (e) Carrying out financial and legal due diligence; (f) Detailed analysis of regulatory and tax implications and evaluation of alternative structures; (g) Deal structuring such as merger, friendly acquisition, hostile bid, asset buy-out, de- merger, slump sale etc; (h) Advising as to the means and source of financing transactions and arranging finance, if required; (i) Complying with regulatory requirements such as managing public offer under SEBI's Takeover Regulations; (j) Counseling on bidding str....
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....agement' is a broad term to cover the various functions and the multifarious activities required for its efficient and effective functioning; (ii) management consulting is not restricted, but is wide enough to include advisory services rendered on any aspect of management; (iii) merger and acquisition are an important aspect of management of any organization today; and (iv) advisory services including financial advisory services, for merger and acquisition clearly fall with in the realm of management consulting. It is also stated by them that even though merger and acquisition is provided by a variety of agencies, known as investment banks/merchant banks, corporate finance/advisory services of commercial banks/financial institutions corporate finance/advisory services division of accounting/audit firms, specialized mergers and acquisition boutiques, strategy/general management consultants having differing organizational or ownership profile, such semantic differences in any way do not obliterate the basic nature of the services that clearly relate to management of an organisation. Accordingly the financial advisors for merger and acquisition ....
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....n by M/s FML from department as they never applied for service tax registration, never filed ST-3 returns and never made payment of service tax prior to 15.09.2009. I observe that the nonpayment of service tax was unearthed by department by causing investigation against them, hence, the proviso of Section 73(1) of Finance Act,1994 has been rightly invoked for extended period of limitation and the service tax amount as detailed in para appears to be recoverable from party. I further find that the party suppressed vital information with intent to escaped assessment of service tax and hence to evade payment of service tax. Since they had not paid service tax, they are also liable to pay, interest at appropriate rate, under the provisions of section 75 of Finance Act, 1994 39. In view of the facts narrated above, it appears that M/s FML had suppressed vital information from department during the relevant period and had not applied for registration and not filed service tax returns as required under the provisions of Finance Act, 1994. If the said inquiry had not been initiated by department, non payment of service tax by M/s FML would have gone unnoticed and a huge amount of s....
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....ench in case of VSL India Private Limited [Service Tax Appeal No. 530 of 2012 Final 40164-40166/2023 Order dated 16.03.2023] and following has been held: "15.3.1 Section 65 (65) defines "management or business consultant" to mean: - "(65) "management or business consultant" means any person who is engaged in providing any service, either directly or indirectly, in connection with the management of any organisation or business in any manner and includes any person who renders any advice, consultancy or technical assistance, in relation to financial management, human resources management, marketing management, production management, logistics management, procurement and management of information technology resources or other similar areas of management;" 15.3.2 C.B.E.C. Circular F. No. 177/2/2001-CX.4 [Section 37B Order No. 1/1/2001-ST] dated 27.06.2001 has clarified the scope of management consultant service. The relevant portion of the above Circular read as under: - "7. In this regard, the Board had consulted the Indian Institute of Management, Ahmedabad for obtaining an expert opinion on the subject matter. They have opined that the term "Manag....
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....would thus include any adviser who renders services on any aspect of management. 19. Having so concluded that the services in question do not constitute the services of a consulting engineer, the question remains as to whether these services constitute the services of a "management or business consultant." We have considered the interpretation placed upon the definition of the term "management or business consultant" employed in section 65(65) by the Board. From that interpretation, and from the words of the statute, what emerges is that the task of management extends to all those tasks that do not constitute the core business of the enterprise, and which do not fall under other specialisations. It appears to us that while no definition of the term "management" can be satisfactory, the best way to approach its construction would be negatively, i.e., by elimination. Section 65(65) too is worded widely enough to provide for this and covers financial management, human resources management, marketing management, management of information technology resources and, the crucial residuary limb "other similar areas of management." In our opinion, all the services under the agreemen....
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....d, we are guided by the ratio decidendi in M/s. Jay Yuhshin Ltd. (supra) and M/s. Star Industries Ltd. (supra). (iv) With regard to the invocation of extended period, we hold that the Revenue has not justified, with adequate reasons, for invoking the extended period of limitation and hence, this grounds-of appeal are partly allowed and we hold that the tax has been correctly levied for the normal period." 4.5 It is the claim of the appellant that the services provided by them are classifiable under the category of Legal Consultancy Service and they are paying the service tax on these services under that category from 01.09.2009 (Legal services became taxable from this date). To examine the claim of the appellant we reproduce below the definition of the said services as per Section 65 (105)(zzzzm) of the Finance Act, 1994. "65(105) taxable service means any service provided or to be provided, - (zzzzm) (i) to any person, by a business entity, in relation to advice, consultancy or assistance in any branch of law, in any manner; (ii) to any business entity, by any person, in relation to representational services before any court, tribunal or auth....
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....ng management control, representation on Board and management etc." This services cannot be in relation Legal Consultancy as defined by Section 65 (105) (zzzzm) and are appropriately classifiable under the category of Business and Management Consultancy Services. 4.7 From the brochure of the appellant it is evident that appellant is providing a vast category of services some of which may be classifiable under the category Legal Consultancy Services and hence the value of the said services has to be excluded while determining the demand for the period prior to 01.09.2009. While determining the quantum of service tax payable certain amounts have been excluded as per the show cause notice. However we do not find any submissions made by the appellant before the original authority in regards to the correctness of the exclusions made and also no determination made by the adjudicating authority in this regards. For the redetermination of the amounts which should be subjected to tax under the category of Business and Management Consultants the issue needs to be reconsidered by the original authority for the entire period of demand. 4.8 Appellant have claimed the services provided by ....