TMI Blog2019 (6) TMI 109X X X X Extracts X X X X X X X X Extracts X X X X ..... y appellant. Such transfer of right granted to appellant, by the certifying authority in terms of IT Act, 2000, is also not permissible - It is only the Appellants who could have issued the Digital Signature Certificate and this could not have been done by any other person or agency appointed by appellant. Hence mere act of collecting the applications and verification of the same for onward submission to the appellant cannot be termed as grant of representational rights . - Demand set aside. Management Consultancy Service - HELD THAT:- From the scope of work as indicated above, Honeywell has contracted appellants to provide technical support and consultancy for developing a system of smart card for access control. Access Control is part of management system of any organization and is also covered by the term logistic management . Since these services have been provided for logistic management or access control system of the organization the services provided will qualify under the category of Management Consultancy Services - the present case will fall within the category of Management Consultancy Services. Commercial Coaching and Training Services - HELD THAT:- The issue i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he matter is remanded back to the adjudicating authority for affording the opportunity to appellants to produce the documents as prescribed by Rule 9 of CENVAT Credit Rules, 2004 for purpose of availment of credit. Commissioner should consider the documents produced by the appellants before him and then decide with regards the admissibility of CENVAT Credit against those documents - matter on remand. Appeal allowed by way of remand. - Appeal No. ST/87313, 87572/2015 - A/85956-85957/2019 - Dated:- 18-3-2019 - Mr. Sanjiv Srivastava, Member (Technical) And Dr. Suvendu Kumar Pati, Member (Judicial) Shri Prasad Paranjape, Advocate for the Appellant/Assessee Shri M.K. Sarangi, Authorised Representative for the Respondent/Revenue ORDER PER: SANJIV SRIVASTAVA These appeals are directed against order in original No 14/PR. COMMR (WLH)/LTU-M/S.TAX/2015 DATED 31.07.2015 of Commissioner Central Excise Service Tax (LTU) Mumbai. The details of appeals filed are as under: Appeal No Appellant Amount Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Finance Act, 1994. Taxable Service Period Amount in Rs Maintenance and Repair 04/05- 12/06 2,56,48,847 Manpower Recruitment 75,20,423 Commercial Coaching Training 17,48,364 Consulting Engineer/ Technical Consultancy 3,48,376 Franchisee Services 44,97,598 Erection Commissioning Installation 2,17,71,007 Management Consultancy Service 6,86,513 Mandap Keeper 1,59,261 Business Support 48,33,248 Total 6,72,13,637 CENVAT Credit Sought to be disallowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been held in case of- i. Sify Technologies Ltd [2018 (14) GSTL 268 (T-Chennai)] ii. Global Transgene Ltd [2013 (32) STR 86 (T-Mum)] iii. Direct Internet Solutions P Ltd [2014 (36) STR 849 (T-MUM)] iv. Delhi International Airport P Ltd [2017 (50) STR 275 (Del)] v. Franch Express Network 9P) Ltd [2008 (12) STR 370 (T-Chennai)] ii. Commissioner has in his order in para (vi) para 22 held that prior to 16.06.2005 the services are not covered under the category of franchise services hence confirming the demand for that period under that taxable category is erroneous. Further for period 01.05.2006 demand has been made under category of Business Support Services hence confirming the demand under the category of Franchise Service is going beyond the Show Cause Notice and is erroneous and not sustainable as held in following cases- i. Mahakosal Beverages Pvt Ltd. [2014 (330 STR 616 (Kar)] ii. Balaji Contractor [2017 (52) STR 259 (T-Del)] iii. Caprihans India Ltd [2015 (325) ELT 632 (SC)] iii. Of Smart Card Migration project for Honey ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Reliance on {Martin Lottery Agencies Ltd [2009 (14) STR 593 (SC)], Kasturi Sons Ltd [2011 (22) STR 129 (Mad)], Financial Software Systems Pvt Ltd [2014 (3) STR 393 (T-Chennai)], Phoenix IT Solutions Ltd [(22) STR 400 (T-Bang)], NCR Corporation India Pvt Ltd [2008- TIOL-1322-CESTAT-BANG], India Switch Co Pvt Ltd [2015 (39) STR 288 (T-Chennai)]. Further by stating, For removal of doubts in the explanation inserted w.e.f 01.06.2007, it is admitted that there existed a doubt in the minds of taxpayers and hence extended period of limitation cannot be invoked. viii. Appellants do not provide Manpower Recruitment or Supply Service but were providing software development services and raised invoices based on time incurred by its employees. These contracts are called time and material contracts wherein the deliverable is in form of software, and the consideration is on the basis of time spent by its employees. Thus Commissioner has rightly held that these services are not covered under Taxable category of Manpower Recruitment or Supply Services. {reliance on 2012 (25) STR 89 T-Del)] and Bentley Systems (I) Pvt Ltd. [2017-TIOL-3714-CESTAT-DEL)]} 3.3 Ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i. Franchisee Service; ii. Management Consultancy Services; iii. Commercial Coaching and Training Services; iv. Management Maintenance Repair Service; v. Manpower Recruitment or Supply Services. II Demand of CENVAT Credit disallowed for non production of documents. 4.3 Demand of Service Tax on services provided by the appellants in category of- 4.3.1 Franchisee Service- a. As per the order of Commissioner demand under this category has been confirmed for the period from 04/2005 to 12/2006. While confirming the demand under this category Commissioner has considered demand made under two categories as per the show cause notice Annexure 1 and confirmed the same under the category of Franchisee Services. The two demands as per the Show Cause Notice are as listed below: Service 4/05 to 9/05 10/05 to 12/06 Total Rs Service Tax Cess Service Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ranted representational right to provide the certifications . They interacted with the customers clearly representing that certification would be by TCS. However, they were not agents of the noticee and were not working for any commission. Instead they were paying fees to TCS in return of the right granted to them. Thus the first clause of the definition is satisfied. v. However, there is nothing on record to show that TCS provided the concepts of business operation to the service receivers. There is nothing to show that they provided any know how, method of operation, managerial expertise, marketing technique or training or standards of quality control to them. Thus, the agreement doesn t pass test of second clause. vi. It has been rightly noted in the show cause notice that in order to be recognized as a franchise for the period prior to 16/06/2005, the agreement must fulfill all the four conditions. Since the agreement doesn t meet terms of second clause, it cannot be termed as Franchise. Consequently the, the demand for the period upto 15.06.2005 is dropped. vii. For the period from 16/06/2005 onwards, the clause (ii) t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the franchisor. The individual identity of the franchisee is subsumed in the identity of the franchisor. In the case of a franchise, anyone dealing with the franchisee would get an impression as if he were dealing with the franchisor. e. Similarly in case of Global Transgene Ltd [2013 (32) TR 86 (T-Mumbai)] Tribunal has held as follows: 5.2 From the above, it will follow that before the amendment w.e.f. 16-5-2005 and thereafter the foremost, and key pre-requisite to qualify as taxable service is that the franchisee should have been granted representational right to sell or manufacture goods or to provide service or undertake any process identified with franchisor, whether or not a trade mark, service mark, trade name or logo or any such symbol, as the case may be, is involved. Board, vide Circular No. 5918/2003-S.T. and Circular No. B1/6/2005-TRU, has recognized this aspect. 5.3 Undisputedly, the appellants have imported the Technology which is owned by BTC and patented in China. The said technology is imported in the form of the mother seeds and the same are multiplied in the laboratory by or on behalf of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of any working system of any organisation ] substituted by phrase [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.] with effect from 01.05.2006 b. As per the Agreement dated 15th January 2005, HAIL has entered into contracts with its customer Tata Consultancy Services Ltd ( Customer ) for the supply of smart card based physical access control solution, access controller/ readers and associated software ( Products ) to the Customer ( Contract ) and require the services of the Contractor to provide project management services including but not limited to on site job coordination, delivery and job execution scheduling, technical support on design of the solution and installation of the Products and related services thereto. c. As per the Annexure-II PO No 38187 dated 18/07/2005, (Purchase Order of Honeywell Automation India Ltd) following is scope of work assigned to appellant: 1. Technical Support and consultancy on design of sm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of Finance Act are as under: Any service, either directly or indirectly, in connection with the management of any organization in any manner. Any advice, consultancy or technical assistance, relating to conceptualizing, devising, development, modification, rectification or upgradation of any working system of any organization. In either case, focus has to be made to the term management consultant as understood in the above statutory definition. In view of the test laid down therein the present case will fall within the category of Management Consultancy Services. f. The test laid down in case at ii is as follows: 7. The above definition makes it clear that what is envisaged from a consultant is advisory service and not the actual performance of the management function. In the present case, the appellant was in-charge of the operation of the factory and thus was performing the management function. This case lays down the test that Management itself cannot be management consultant. Since that s not the issue in dispute in present ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egislature while defining the terms. The issue is not whether the training activity is primary activity of the appellant or not is immaterial in terms of the definition. If the training of any type is provided which is not falling within the exclusion category specified by the definition then definitely it is to be classified as taxable under that category. Similar reasoning has been adopted by the tribunal in case of Bentley Systems. In our view the issue for consideration can never be whether the activity is primary or ancillary but what needs to be examined whether it falls within the definition of taxable service and has been provided for a commercial consideration. d. Since we find that in view of the specific finding that training in the software developed has been provided by the appellant for a commercial consideration the same is covered by the definition of Commercial Training and Coaching Services and is taxable accordingly. Thus we uphold the demand confirmed by the Commissioner against this service. 4.3.4 Management Maintenance Repair Service: a. Demand in respect of service provided by the appellants in respect of an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anpower recruitment or supply agency service is not changed, the service rendered would fall only under the category of manpower supply agency services. Further, the CESTAT have held in Diebold Systems P. Ltd. - 2008 (9) S.T.R. 546 that introduction of Service tax on a new service, presupposes its noncoverage in the already existing services. As against the above, the definition of Man Power Recruitment or Supply Agency under Section 65(68), with effect from 16-6-2005 reads as : manpower recruitment or supply agency means any commercial concern engaged in providing any service, directly or indirectly, in any manner for recruitment or supply of manpower, temporarily or otherwise, to a client. The term commercial concern was substituted by the term any person with effect from 1-5-2006. Taxable service means any service provided or to be provided to a client, by a manpower recruitment or supply agency in relation to the recruitment or supply of manpower, temporarily or otherwise, in any manner . The expression in relation to has wide connotation. In Doypack Systems (P) Ltd. v. UOI, 1988 (36) E.L.T. 201 (S.C.), the Apex Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilu Traders [2018 (10) GSTL 462 (T-Del)] is in respect of job work undertaken in the premises of principal and hence is not on the same issue. The second decision in case of Cognizant Tech Solutions (I) Pvt Ltd [2010 (18) STR 326 (T-Chennai)] has been distinguished by the tribunal in case of Future Focus Infotech India (P) Ltd [2018 (18) GSTL 441 (T-Chennai)]. d. In view of our findings as such we hold that Service tax demanded under the category of Manpower Recruitment or Supply Services is maintainable on merits. However the matter needs to be reconsidered by the original authority for determining the issues of limitation and penalty. 4.4 Demand of CENVAT Credit disallowed for non production of documents. 4.4.1 A substantial amount of CENVAT Credit has been sought to be disallowed for the reason of non production of documents. Appellants claim that they are in possession of the documents and can produce the same before the adjudicating authority. In our view the end of justice will be met if the matter is remanded back to the adjudicating authority for affording the opportunity to appellants to produce the documents as prescribed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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