Home Case Index All Cases Service Tax Service Tax + AT Service Tax - 2019 (5) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (5) TMI 266 - AT - Service TaxInterpretation of Agreement - Classification of services - Representation services or Management Consultancy Services? - HELD THAT:- The agreement itself is named as Representative Office Agreement. Preamble of the agreement also states that the intention of the agreement is that appellant is to have their persons in U.K. to represent them in its dealing with lawyers, bankers, consultants and revenue and other authorities. Thus, the intention of the Representative Office Agreement is to have a Representative Office for the appellants overseas. Clause 2 of the agreement mentions about the fees that has to be paid by appellant to M/s. Vdeanta. The fees is the consideration for performing its duties as a Representative Office. The fees is fixed as US$20 lakhs. Thus, from the agreement, it is very much clear that the intention of the parties is that appellants is to have Representative Office overseas. The department cannot pick and choose sentences from the agreement to interpret the meaning of the agreement to be a Consultancy Agreement. The issue would be more clear from the Consulancy Agreement entered into between the appellants and M/s. Vedanta. In clause (c) of the preamble of the Consultancy Agreement, it is stated that M/s. Vedanta is willing to provide Strategic Planning and Consultancy Services to appellant and each of its subsidiaries and for such Consultancy Agreement, the fees are fixed US$ 30 lakhs. The appellants have discharged service tax on the amount paid under this agreement. Thus, on analysis of both agreements, we have no hesitation to conclude that the agreement under question is nothing but a Representative Office Agreement and not a Consultancy Management Agreement. The demand of service tax on the amount of US$ 20 lakhs, which was paid by the appellant to M/s. Vedanta as Representative Office cannot be subject to levy of service tax under the category of Management Consultancy Services. The demand therefore cannot sustain on merits. Time Limitation - Revenue Neutrality - HELD THAT:- The service tax, in the present case, is discharged under reverse charge mechanism. In case, the appellants pay the service tax, they would be eligible for credit of the same. Thus, the entire exercise is revenue neutral situation - The show-cause notice has been issued invoking the extended period alleging suppression of facts with intention to evade payment of service tax. When the situation is revenue neutral one, wherein, the appellants would be eligible for credit, it cannot be said that the appellants are guilty of suppression of facts with intention to evade payment of service tax - The invocation of extended period is without basis. The appeal succeeds on limitation also. Appeal allowed - decided n favor of appellant.
|