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2023 (3) TMI 802 - AT - Service TaxClassification of services - Management or Business Consultant services or Consulting Engineer services - Wrong availment of exemption under Notification No. 18/2002-S.T. dated 16.12.2002 by wrongly classifying the services imported from its group companies - on-inclusion of TDS in the taxable value of services received from outside India - invocation of extended period of limitation - revenue neutrality. Classification of the service - HELD THAT:- From the evidence on the record, particularly clauses from the agreement dated 03.03.2006 which are extracted in the Show Cause Notice, it is clear that the services rendered extend far beyond engineering to areas like procurement management, purchase negotiations, supplier selection, management information systems, trading and problem source identification, finance, advertising and communication, legal services, insurance, etc. - As Krishna Iyer J. put it in COMMISSIONER OF INCOME-TAX, AP VERSUS TN ARAVINDA REDDY [1979 (10) TMI 1 - SUPREME COURT], “The purpose is plain; the symmetry is simple; the language is plain. Why mutilate the meaning by lexical legalism?” To treat legal, advertising, finance and insurance services as being linked to engineering would be to play this game of lexical legalism or, as Krishna Iyer J. put it in the same case, “linguistic distortion.” 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.” The interpretation placed upon the definition of the term “management or business consultant” employed in section 65(65) by the Board is considered. 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 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 agreement we have referred to above will fall under one or the other of these limbs - we have to agree with the conclusions drawn by the Ld. Commissioner in classifying the services received by the appellant under ‘management or business consultant’ service. Whether the TDS amount remitted by the appellant partakes the character of consideration for ‘service’? - HELD THAT:- The TDS is a tax obligation which can never partake the character of value or consideration for the transaction or of the goods or of services. It is not uncommon that any business contract/agreement inter-se parties primarily focuses on the value/consideration and then spells out as to who would bear the TDS obligation. This cannot be construed as to mean that TDS is also a part of such value/consideration. This is also because, any value/consideration agreed upon is strictly the choice of the parties but the TDS depends on the rate in force at the relevant point of time. When it is contended that the assessee ‘grossed up’ the TDS, it is understood to mean that the assessee has indeed received only the amount as agreed towards value/consideration and the expenditure towards TDS are met by the assessee. So, when such TDS is not received from the non-resident since it is not towards value/consideration, there is no merit in requiring such assessee to include even the TDS it paid in the value of services, as in the case on hand - the appellant was correct in not including the TDS amount in the value of taxable services. Whether the contention of the appellant that the situation is revenue neutral is correct? - HELD THAT:- Reliance placed on CESTAT larger Bench order in the case of JAY YUHSHIN LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, NEW DELHI [2000 (7) TMI 105 - CEGAT, COURT NO. I, NEW DELHI], wherein it has been categorically held by the Learned 5-Member Bench that the issue of Revenue neutrality being a question of fact, the is to be established in the facts of each case and not merely by showing the availability of an alternate scheme - also, it is always open for the appellant to make such claim for credit, as per the Rules and Regulations prescribed under the statute. Whether the Show Cause Notice issued by invoking the extended period is justifiable? - HELD THAT:- There was a host of services received but there is also no doubt in our minds that a few of the activities could possibly be brought under consultant engineer services. The very fact that even the Board itself was not clear, for which reason an opinion was sought from the expert, namely, IIM Ahmedabad, fortifies the stand of the appellant that interpretation was involved. Thus, the appellant has made out a case for interference insofar as the invoking the larger period of limitation is concerned -To ascertain, however, the tax liability for the normal period, this issue, to this extent, is remitted to the file of adjudicating authority. Appeal disposed off.
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