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TMI Blog2023 (3) TMI 802X X X X Extracts X X X X X X X X Extracts X X X X ..... ance in the fields of consultancy, advisory, operation and other services, as per the terms contained in the above agreement; it was also clear that the above services were to be provided by the VSL group as such, including M/s. VSLI and all other subsidiary and affiliate companies with whom separate service agreements could be entered into. Thus, an agreement was signed between the appellant and M/s. VSL, Hong Kong for providing assistance in managerial, financial, sales, marketing, controls and audit, taxes, personnel and training and technical services. 3. A Memorandum of Understanding (MOU) dated 01.01.2008 was drawn between the appellant and M/s. VSLI, which appears to be in furtherance to the earlier agreements between the two parties. 4. It appears that there was an audit of accounts of the appellant by the Internal Audit Group of the Service Tax Commissionerate wherein: (i) 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 and (ii) non-inclusion of TDS in the taxable value of services received from outside India, were noticed, which prompted the issuance of Show Cause Not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting Engineer" services. Thus, the Revenue entertained a doubt that, by claiming the above services as Consulting Engineer Services, which itself was wrong, the appellant had wrongly availed the exemption benefit of Notification No. 18/2002-S.T. ibid. and thus, it was proposed to re-classify the services involved under Management or Business Consultant Services / Architect Services / Supply of Tangible Goods Services and thereby demanding Service Tax of Rs.94,15,417/- (Service Tax + Education Cess + Secondary and Higher Education Cess), for the period from October 2008 to July 2009, as detailed at Annexure-I to the Show Cause Notice. 6.3.2 It is the further case of the Revenue that the appellant had credited the value mentioned in the invoices to the accounts of the AE in their books of account whereas the appellant had paid the Service Tax for the invoices received from the AE only for the amounts credited in the accounts of their AE, which, according to the Revenue, was contrary to the Explanation under Section 67 read with Explanation under Rule 6(1) of the Service Tax Rules, 1994. That is to say, the appellant had borne the TDS expenses of its AE over and above the amounts sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant under Consulting Engineer Service was an afterthought, just to avail the benefit of the exemption Notification ibid. He thus concluded that the adjustment of R&D Cess sought by the appellant against the Service Tax liability was without any legal sanctity. 8.3 On the next issue of includability of TDS and the allegation of short payment of Service Tax on TDS component involved in the payment made to the appellant's AE, the Adjudicating Authority has referred to clauses 10(A), 10(C), 10(D) and 10(E) of the agreement dated 03.03.2006 to conclude that in terms of Section 67 of the Act read with Rule 7 of the Valuation Rules, the appellant was required to pay Service Tax on the gross consideration payable to its AE and not on the net amount paid as claimed by the appellant. 8.4 With regard to the invoking of extended period of limitation, the Commissioner has held that there was clear wilful mis-statement in ST-3 return inasmuch as the appellant had declared that it was not claiming any exemption, without further declaring anywhere in the ST-3 return that they had adjusted the R&D Cess from the total tax payable. 8.5 With regard to the other legal contention that the w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of service was professional / technical only. (iv) Even if the services received were not classifiable under Consulting Engineer Service, still the exemption envisaged under Notification No. 18/2002-S.T. was available, irrespective of the nature of such taxable services. (v) Without prejudice, even if the services are classifiable under Management or Business Consultant Service / Architect Service, both the above services would fall under Rule 6 (5) of the CENVAT Credit Rules (CCR), 2004, as observed by the Adjudicating Authority and therefore, the authority himself has accepted that the issue is revenue neutral. (vi) He relied on the following case-law in this regard: - (a) M/s. The Oberoi Rajvilas & ors. v. Commissioner of Central Excise, Jaipur [2018 (5) TMI 1715 - CESTAT, New Delhi] (b) M/s. Lemon Tree Hotels Pvt. Ltd. v. Commissioner of Service Tax, Chennai [2018 (1) TMI 1215 - CESTAT, Chennai] (c) M/s. Beekay Engineering Corporation v. Commissioner of Central Excise, Raipur [2017 (11) TMI 1468 - CESTAT, New Delhi] (d) Commissioner of C.Ex., Goa v. M/s. VM Salgaonkar & Bros. Pvt. Ltd. [2008 (2) TMI 90 - CESTAT, Mumbai] (vii) The appellant has borne the TDS as c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we shall consider the definitions of "consulting engineer" and "management or business consultant" in the context of its taxability in terms of Section 65 (105) of the Finance Act, 1994. In addition, we also refer to the Trade Notice No. 53 CE (Service Tax)/97 - C.No. CE-20/41/ST/Trade Notice/97 dated 04.07.1997, Notification No. 18/2002-S.T. dated 16.12.2002, Section 3 of the Research and Development Cess Act, 1986 and C.B.E.C. Circular F. No. 177/2/2001-CX.4 (supra), which are relevant in order to decide the first issue. 15.2.1 "Consulting Engineer" has been defined in Section 65 (31) of the Finance Act, 1994, as under: - "(31) "consulting engineer" means any professionally qualified engineer or any body corporate or any other firm who, either directly or indirectly, renders any advice, consultancy or technical assistance in any manner to any person in one or more disciplines of engineering" 15.2.2 "Taxable Service" has been defined in Section 65 (105) to mean: - "(105) "taxable service" means any service provided or to be provided, - ..... ..... ..... (g) to any person, by a consulting engineer in relation to advice, consultancy or technical assistance in any mann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould also be equally encompassing expression and would include any adviser who renders services on any aspect of management. They have further opined that financial advisory services rendered in merger and acquisition transactions are clearly in the nature of services in connection with the management of an organisation as merger and acquisition themselves are important dimension of modern management." 15.4 Trade Notice No. 53 CE (Service Tax)/97 - C.No. CE-20/41/ST/Trade Notice/97 dated 04.07.1997 has clarified the scope of the term "consulting engineer" as having wide amplitude, to include any one or more of the following categories: - "(i) Feasibility study. (ii) Pre-design services/project. (iii) Basic design engineering. (iv) Detailed design engineering. (v) Procurement. (vi) Construction supervision & project management. (vii) Supervision of commissioning and initial operation. (viii) Manpower planning and training. (ix) Post-operation and management. (x) Trouble shooting and technical services, including establishing systems and procedures for an existing plant. Though the above list is not exhaustive, it illustrates the wide scope and nature of the se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ified the scope of management consultant service and this has been specifically considered at paragraph 6.3 of the impugned order. A perusal of the scope of management consultant service, as clarified by the board, leads to the irresistible conclusion that "Management" is generally understood to mean as activities or services related to running the affairs of an organization/business; which typically involves carrying out a host of activities, functions and tasks and at different levels; including tasks such as planning, organising, staffing, directing, controlling and coordinating; management also involves designing organisational structure around functions like marketing, manufacturing, research and development and finance and/or business area such as product groups or geographical markets; management consultant would thus include any adviser who renders services on any aspect of management. 16.2 Trade Notice No. 53 CE(ST)/97 (supra) has clarified the scope of "consulting engineer" as having wide amplitude to include one or more of the following categories: - (i) Feasibility study. (ii) Pre-design services/project. (iii) Basic design engineering. (iv) Detailed design eng ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, finance, advertising and communication, legal services, insurance, etc. As Krishna Iyer J. put it in CIT v. T. N. Aravinda Reddy [1980] 120 ITR 46 (SC), "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." 19. 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." We have considered the interpretation placed upon the definition of the term "management or business consultant" employed in section 65(65) by the Board. 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 to us that while no definition of the term "management" can be satisfactory, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal. Be that as it may, if that is so, it is always open to the assessee to claim such a credit. 36. We, thus, do not find any merit in this appeal and dismiss the same with cost." 21.2 We must also refer to the CESTAT larger Bench order in the case of M/s. Jay Yuhshin Ltd. v. Commissioner of Central Excise, New Delhi [2000 (119) E.L.T. 718 (Tribunal - LB)], 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. 22. In view of our above discussion, we are of the view that as laid down by the Hon'ble Apex court in M/s. Star Industries (supra), it is always open for the appellant to make such claim for credit, as per the Rules and Regulations prescribed under the statute. 23. We now consider the contention as to issue involving interpretation, etc., for invoking the larger period and this appears to be genuine. This is because of the reason 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one is a non-resident and such non-resident doesn't have any PE, then it becomes the responsibility of the other party who is an Indian resident, to meet with the TDS obligation arising on account of the agreement in question. Even if such clause is not there in the agreement, still the resident cannot escape the tax liability and hence it becomes incumbent upon it to deduct tax at appropriate rate, at source, before making the payment. We find that the decisions relied upon by the appellant support our above view. 25. In view of the above discussions, we hold as under:- (i) With regard to the classification of service, the service involved has been correctly classified under 'management or business consultant' service. (ii) With regard to includability of TDS, we hold that the appellant was correct in not including the TDS amount in the value of taxable services. (iii) Insofar as revenue neutrality is concerned, we remit the matter back to the file of the Adjudicating Authority to examine if the appellant is entitled to avail CENVAT Credit and in this regard, we are guided by the ratio decidendi in M/s. Jay Yuhshin Ltd. (supra) and M/s. Star Industries Ltd. (supra). (iv) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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