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M/s Kotak Mahindra Capital Co. Ltd. Versus Commissioner of Service Tax, Mumbai-I

Liability of Service Tax - Advisory Services & Consulting Services in relation to Merger & Acquisitions for the period prior 16.07.2001 - Whether these services comes under Management Consultant Services and Banking & other Financial Services - Held that: the services as rendered by the appellant, would not fall under Management consultancy Services, as there services rendered by the appellant may not get covered even as per CBEC Circular dated 26.07.2001. Also by relying on the decisions taken .....

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ran, Member (Judicial) And Hon ble Mr. C.J. Mathew, Member (Technical) For the Appellant : Shri Rohan Shah, Advocate with Shri Anay Banhati, Advocate Ms. Sanchita Rungta, Advocate For the Respondent : Shri B. K. Iyer, Supdt. (A.R.) ORDER Per M. V. Ravindran This appeal is directed against Order-in-Appeal No. MI/AV/36/2011 dated 31.01.2011 passed by the Commissioner of Central Excise (Appeals-II), Mumbai-I. 2. Heard both sides and perusal of the records. 3. The appellants are engaged in professio .....

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ause notice dated 10.04.2006 was issued demanding Service Tax for the period, under the category of management consultancy services . Appellant contested the demand on merits as well as on limitation. The adjudicating authority, after following due process of law, confirmed the demands raised with interest and also imposed penalties. Aggrieved by such an order appeal was preferred, first appellate authority did not agree with contentions raised and concurred with adjudicating authority s order. .....

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e would submit that since a new category of the services was introduced w.e.f. 16.07.2001, no Service Tax liability arises for the period prior to 16.07.2001. He would submit that Hon'ble High Court of Bombay in the case of Indian National Shipowners Association Vs. UOI [2009 (14) STR 289 (Bom.)] held so, he would read the specific para to us which is reproduced in reported judgement in the case of DSP Merrill Lynch Limited wherein this Bench by a final Order No. 85279 85280/16/STB dated 11. .....

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s. 7. The issue involved in this case is regarding tax liability on appellant for the period prior 16.07.2001 under the category of Management consultancy Services for the Advisory Services & Consulting Services in relation to Merger & Acquisitions. It is undisputed that the demand in this case is only on for the rendering Advisory Services in respect of Merger & Acquisitions, Revenue wants to classify the said services under Management consultancy Services prior period to 16.07.2001 .....

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on, rectification or upgradation of any working system of any organisation. Banking & other Financial Services means, the following services provided by a banking company or a financial institution including a non-banking financial company, namely:- (i) financial leasing services including equipment leasing and hire-purchase by a body corporate; (ii) credit card services; (iii) merchant banking services; (iv) securities and foreign exchange (forex) broking; (v) asset management including por .....

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l under Management consultancy Services, as there services rendered by the appellant may not get covered even as per CBEC Circular dated 26.07.2001. We do not agree with the arguments of learned Departmental Representative, for the simple reason on the question of Merger & Acquisitions (as per the CBEC) was considered by this Bench in the case of DSP Merrill Lynch Limited (supra) and in para 11 it is held that :- 11. Revenue has challenged the vacation of demand on Merger and Acquisition ser .....

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try. But that is not the case in the matter in hand. In our case, the earlier entry speaks of Business Auxiliary Services of the client, whereas the subsequent entry speaks of display of logo per se to be amounting to promotion and advertisement of the business activity of the client. In relation to the earlier entry, the activity conducted by the service provider should disclose promotion and marketing of the service rendered by the service recipient to the others and there must be tangible evi .....

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s discussed in para 8 above would hold in the case of M & A services also. The whole concept of management consultancy as related in the definition of Management Consultant does not give an impression that specific service such as Mergers and Acquisitions is covered by it. As we have discussed above, the concept of Management Consultancy is clearly consultancy and technical assistance in the running of the affairs of an organization. The definition itself refers to various aspects of the wor .....

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tion 65 (83)], Cost Accountants [Section 65(84)], and Secretaries [Section65(85)] would all get covered under the definition of Management Consultancy Service . It would render many entries otiose. It is settled law that a service tax entry should be interpreted a contextual manner. Reliance is placed on the Tribunal judgment in the case of Board of Control for Cricket in India Vs. Commr. of Service Tax, Mumbai 2007 (7) S.T.R. 384 (Tri.-Mumbai). It was held that - 9. In view of the above guideli .....

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Supreme Court in case of Hariprasad Shivshankar Shukla v. A.D. Divelkar reported in AIR 1957 S.C. 121 held that terminating the services of all the employees on taking over railway company by Govt. of India cannot be considered as retrenchment. Inasmuch as retrenchment connotes that the business itself is being continued, but the portion of the staff or labour is discharged as surplusage. In view of the above ordinary acceptation, the Supreme Court held that termination of services of all the w .....

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nected with advertisement will be an advertising agency. Any interpretation leading to absurdity has to be avoided. 15. Our above view also gets support from the fact that another head of sale of space or time for advertisement and sponsorship services stands created for the purposes of service tax w.e.f. 1-5-06. However, the taxable services in relation to sponsorship services specifically excluded sponsorship of sport events. As such, we find that a subsequent entry having been enacted coverin .....

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ains unchanged without any change in the tax rate. As such, the introduction of new tariff entry do imply that the coverage in the new tariff for the purposes of tax was an area not covered by the earlier entry. It was so held in case of Glaxo Smithkline Pharmaceutical Ltd. reported in 2006 (3) S.T.R. 711 (T) = 2005 (188) E.L.T. 171 (Tri.-Mumbai) as also in case of M/s. ZEE Telefilms Ltd. & M/s. Star India (P) Ltd. v. CCE, Mumbai reported in 2006 (4) S.T.R. 349 (Tribunal) - 2006-TIOL-945-CES .....

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of Balaji Enterprises (supra). We respectfully follow the High Court judgment in the case Indian National Shipowners Association (supra). The new entry of Mergers and Acquisitions extends the coverage of service tax and is not the result of carving out a new entry from the Management Consultancy Service. Consequently we hold that service tax is not payable on M&A Services prior to 16.7.2001 under the category of Management Consultancy Service . It can be seen, that Bench discarded learned De .....

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ied by the presence of two characteristics namely (a) supply of tangible goods including machinery, equipment and appliances for use, (b) there is no transfer of right of possession and effective control of such machinery, equipment and appliances. According to the members of the 1st petitioner, they supply offshore support vessels to carry out jobs like anchor handling, towing of vessels, supply to rig or platform, diving support, fire fighting etc. Their marine construction barges support offs .....

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