TMI Blog2022 (8) TMI 541X X X X Extracts X X X X X X X X Extracts X X X X ..... iated between the organisations in settling the financial dispute. As submitted by the learned Chartered Accountant for the appellant the role of M/s Cotunace was to arrive at a settlement of the pending dispute between the appellant and GCT. M/s Cotunace have not rendered any advice for running the organisation of the appellants in an effective manner. Their role was mediation /arbitration in resolving the dispute. They have only performed the work of mediator/arbitrator in resolving the dispute between the appellant and M/s GCT. Actual work performed cannot be equated with advice. Therefore, M/s Cotunace did not render any management consultancy service to the appellant. The services rendered by M/s Cotunace do not fall under management consultancy service in terms of Section 65 (65) of Finance Act, 1994 - the appellants are not liable to pay any service tax on reverse mechanism on the services rendered by M/s Contunace to the appellants. Any tax paid this regards is liable to be refunded, if otherwise in order. Appeal allowed - decided in favor of appellant. - Service Tax Appeal No.232 of 2012 - FINAL ORDER NO.75459/2022 - Dated:- 11-8-2022 - SHRI P. K. CHOUDHARY, JUD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inistration or control or superintendence . In the aforesaid judgment, it has also been observed that in the context of business, Manage means to control, to guide, to administer, to conduct or direct affairs , carry on business . 3.2 Further, the scope of management consultancy services was examined by the Central Board of Excise and Customs (CBEC) in consultation with the Indian Institute of Management, Ahmadabad and the opinion obtained was communicated vide Board s Circular No. 1/1/2001-S.T., dated June 27, 2001 which reads as follows : 7. In this regard, the Board had consulted the Indian Institute of Management, Ahmadabad for obtaining an expert opinion on the subject matter. They have opined that the term management is generally understood to mean running the affair of an organisation in an organised and systematic manner. To be able to do this efficiently and effectively, management typically involves carrying out a host of activities, functions and tasks and at different levels. Thus management encompasses both strategic and operational level functioning and would include tasks such as planning, organising, staffing, directing, controlling and coordinating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erests. The goal of mediation is to find a mutually acceptable solution that adequately and legitimately satisfies the needs, desires and interests of the parties. 1.8 the mediator employs certain specialized communication skills and negotiation techniques to facilitate a productive interaction between the parties so that they are able to overcome negotiation impasses and find mutually acceptable solutions. 3.7 In line with the process of mediation summarized herein-above, M/s cotuance enabled the parties, viz. the Appellant and GCT to find a solution to the dispute relating to the outstanding dues. M/s cotuance has not in any circumstance provided any advice or consultancy or assistance with respect to management of the financial aspects of the Appellant Company. This factual scenario is evident from the agreement between the Appellant and the M/s Cotunace as well as from the Order of the BIFR intending to settle the outstanding dues between the parties. 3.8 The Appellant submits that in the absence of any form of guidance or advice or assistance with respect to management of the finances of the Appellant, the activity by the Mediator, which is executionary in nature, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... daram Finance Ltd., 2007 (7) STR 55 (Tri- Chennai) 5. Commissioner Vs Basti Sugar Mills Co Ltd, 2012 (25) STR J154 (SC) affirming 2007 (7) STR 431 (Tri) 6. Commissioner Vs Sterlite Optical Technologies Ltd, 2016 (41) STR J305 (Guj) affirming 2009 (13) STR 582 (Tri) 7. Glaxo Smithkline Pharmanceuticlas Ltd., Vs CCE 2005 (188) ELT 171 (Tri-Mumbai) 8. CCE, Chennai Vs Futura Polyesters Ltd, 2011 (24) STR 751 (Tri) 9. Nirulas Corner House Pvt Ltd, Vs Commissioner 2009 (14) STR 131 (Tri-Del) 5. The learned Authorised Representative for the Department submits that the definition of Management Consultants is vast and encompasses the activities undertaken by M/s Cotunace to the appellants. He reiterates the findings of the impugned order and submits that the Department has rightly rejected the refund claim on merits as well as unjust enrichment. He relies on the Tribunal s decision in the case of S. Gurumurthy Vs. Commissioner of Central Excise and Service Tax, Chennai III reported in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o control, to guide, to administer, to conduct or direct affairs of business . We find that Tribunal in the case of GlaxoSmithkline Pharmaceutical Ltd. 2004 (188) ELT 171 (Tri. Mum), held that work of a management consultant is advisory in nature. In other words, management consultant does not take up work which is executive in nature. 9. We find that international council of management consulting institute defines Management Consulting and Management Consultant as below:- Management Consulting: The rendering of independent advice and assistance about the process of management to the clients with management responsibilities. Management Consultants: An individual who provides independent advice and assistance about the process of management to the clients with management responsibilities. Apex Court in the case of R. Dalmia Vs CIT (1977) 106 ITR 895 (SC) observed as follows:- In the context of business, manage means to control, to guide, to administer, to conduct or direct affairs; carry business (shorter Oxford Dictionary, Webster s New World Dictionary), management includes the act of managing by direction, or regulation, or administration or control ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue as together mediation or arbitration would fall under management of business consultancy service. The bench observed that Arbitration proceedings are, increasingly, prevalent in settling of trade dispute that would, otherwise, have depended on judicial institutions for resolution. As a statutorily recognised surrogate, recourse to such proceedings can hardly be construed as service , let alone fitted within one of the taxable services enumerated in section 65(105) of Finance Act, 1994. The mandatory fees for initiation of such proceedings, as well as charges paid for mediation as a prelude arbitration, cannot be any stretch, be rendered liable to tax. We also find that the definition of management or business consultant in section 65(65) of Finance Act, 1994 is in relation to management of any organisation of business; the enumeration therein demonstrates, abundantly, the various segments of management that are intended to be covered and the advice obtained from M/s Agri-Waste Technologies does not appear to fit in with such activity. The confirmation of demands in the order impugned before us in the first appeal on these two counts fails to find sustenance. 12. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e wants to levy Service Tax under the category of Management Consultant in terms of the definition, the appellant is not carrying on the activity of management consultant but are manufacturers of Ferro alloys. Incidentally, they helped in act of acquisition of shares. This activity on their part cannot be brought within the ambit of Management Consultant as is definition. The definition itself clarifies that the activity should be done by a management consultant and it should be connection with the management of any organization in any manner. The appellant has not carried out any activity of management consultant in connection with the management of any organization in any manner. The Commissioner has relied on the Board's Circular which clarifies the activity of management consultant, who renders services in an advisory capacity in respect of merger and acquisition transaction. Such an activity has not been done by the appellant. Even Para of the clarificatory Circular states that such an activity of merger and acquisition transaction are not to be treated as management Consultant. They have to be treated only under Banking and Other Financial Services. The Commissioner not r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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