TMI Blog2023 (3) TMI 802X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 managemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ued 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. - Service Tax Appeal No. 530-532 of 2012 - FINAL ORDER NOs. 40164-40166/2023 - Dated:- 16-3-2023 - MR. P. DINESHA, MEMBER (JUDICIAL) AND MR. M. AJIT KUMAR, MEMBER (TECHNICAL) Shri S. Muthu Venkataraman, Learned Advocate for the Appellant Smt. K. Komathi, Learned Additional Commissioner for the Respondent ORDER These appeals are filed by the assessee against the Order-in-Original Nos. 26 to 28/2012 dated 24.02.2012 passed by the Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. SCN No. 461/2011 dated 13.10.2011 April 2010 to March 2011 9,80,837/- 6.1 The Show Cause Notice dated 29.07.2010 issued by the Commissioner captures, at paragraph 2.1.1, the salient features of the above MOU with M/s. VSLI, which reads as under: - it has been considered expedient and convenient that - the services rendered by VSL Hong Kong shall henceforth be rendered by VSL International on the same terms and conditions - The services being rendered by VSL International to The assessee will continue to be rendered by VSL International - VSL International and the assessee shall enter into a single agreement incorporating the services to be rendered by VSL International and as per that agreement rendering of services by VSL International will be on the same terms and conditions as per the earlier agreement between (a) VSL India and VSL Hong Kong and (b) VSL India and VSL International 6.2 Further, towards the end of paragraph 2.1.1, it is concluded as under: - The MOU also provides that the agreement dated 3.3.2006 entered into between the assessee and VSL, Hong Kong ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Annexure II to the Show Cause Notice. 6.4 For the subsequent periods, Show Cause Notices dated 19.10.2010 and 13.10.2011 were issued to the assessee inter alia proposing to demand the Service Tax of Rs.13,60,794/- for the period from August 2009 to March 2010 and Rs.9,80,837/- for the period from April 2010 to March 2011 respectively. 7. The appellant thereafter appears to have filed a detailed reply trying to justify the classification of the services received, under Consulting Engineer Services, as claimed by it. It also appears to have pleaded that the TDS component was rightly not included in the value of taxable services. The appellant also appears to have taken other legal grounds, namely, that the issue was, in any event, revenue neutral since any tax payable by it would in turn be available to it as CENVAT Credit and that extended period of limitation could not be invoked for the very same reason of revenue neutrality, for which reliance has been placed on a number of judicial precedents. 8.1 The Adjudicating Authority, having considered all the Show Cause Notices for common adjudication, has passed the impugned Order-in-Original Nos. 26 to 28/2012 dated 24.02.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision of the Hon ble Supreme Court in M/s. Mahindra Mahindra Ltd. [2005 (179) E.L.T. 21 (S.C.)] in this regard. 9. It is against this order that the present appeals have been filed before this forum. 10. Heard Shri S. Muthu Venkataraman, Learned Advocate for the appellant and Smt. K. Komathi, Learned Additional Commissioner for the Revenue. After hearing both sides, we find that the following issues are required to be addressed to: - (i) Classification of the service involved; (ii) Whether the TDS amount remitted by the appellant partakes the character of consideration for service ? (iii) Whether the contention of the appellant that the situation is revenue neutral is correct? (iv) Whether the Show Cause Notice issued by invoking the extended period is justifiable? 11. Facts are not in dispute; the first agreement between the appellant and its AE was dated 06.12.2001 and the second agreement, which is dated 03.03.2006, was entered into to renew the above agreement dated 06.12.2001 with retrospective effect from 11.10.2005. There is also a Memorandum of Understanding (MOU) on record, which is dated 01.01.2008 and, as observed by the Commissioner at paragra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) He relied on the following case-law in this regard: - (a) M/s. Magarpatta Township Development and Construction Co. Ltd. v. Commissioner of Central Excise, Pune-III [2016 (3) TMI 811 CESTAT, Mumbai] (b) M/s. Hindustan Oil Exploration Co. Ltd. v. Commissioner of G.S.T. Central Excise [2019 (2) TMI 1248 CESTAT, Chennai] (c) M/s. Gayatri Hi-Tech Hotels Ltd. v. Commissioner of Customs, Central Excise Service Tax, Hyderabad-I [2022 (5) TMI 141 CESTAT, Hyderabad] (d) M/s. T.V.S. Motor Company Ltd. v. Commissioner of Central Excise Service Tax, Chennai [2021 (9) TMI 81 CESTAT, Chennai] (ix) The entire exercise was revenue neutral and therefore, the allegation as to suppression, etc., was not justifiable. (x) He relied on the following case-law in this regard: - (a) Commissioner of C.Ex., Jamshedpur v. M/s. Jamshedpur Beverages [2007 (214) E.L.T. 321 (S.C.)] (b) Commissioner of C.Ex., Pune v. M/s. Coca-Cola India Pvt. Ltd. [2007 (213) E.L.T. 490 (S.C.)] (c) M/s. Nirlon Ltd. v. Commissioner of C.Ex., Mumbai [2015 (320) E.L.T. 22 (S.C.)] (d) Commissioner v. M/s. Hyundai Motor India Pvt. Ltd. [2020 (32) G.S.T.L. J154 (S.C.)] ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clared that services provided by a consulting engineer in relation to advice, consultancy or technical assistance in the disciplines of both computer hardware engineering and computer software engineering shall also be classifiable under this sub-clause; 15.3.1 Section 65 (65) defines management or business consultant to mean: - (65) management or business consultant means any person who is engaged in providing any service, either directly or indirectly, in connection with the management of any organisation or business in any manner and includes any person who renders any advice, consultancy or technical assistance, 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; 15.3.2 C.B.E.C. Circular F. No. 177/2/2001-CX.4 [Section 37B Order No. 1/1/2001-ST] dated 27.06.2001 has clarified the scope of management consultant service. The relevant portion of the above Circular read as under: - 7. In this regard, the Board had consulted the Indian Institute of Management, Ahmedabad for obtain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not exhaustive. 15.5 Notification No. 18/2002-S.T. dated 16.12.2002 grants exemption to taxable services provided by a consulting engineer to any person on transfer of technology from so much of the Service Tax leviable thereon under Section 66 of the said Act, as is equivalent to the amount of cess payable on the said transfer of technology under the provisions of Section 3 of the Research and Development Cess Act, 1986 (hereinafter referred to as the R DC Act ) subject to the conditions laid down thereunder. Section 3 of the R DC Act reads as under: - 3. Levy and collection of cess on payments made towards import of technology. (1) There shall be levied and collected, for the purposes of this Act, a cess at such rate not exceeding five per cent. on all payments made towards the import of technology, as the Central Government may, from time to time, specify, by notification, in the Official Gazette. (2) The cess shall be payable to the Central Government by an industrial concern which imports technology on or before making any payments towards such import and shall be paid by the industrial concern to any specified agency. 15.6.1 Notification No. 18/2002-S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vision 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. 16.3 Thus, when clarifications as regards both the services are considered, some of the activities appear to overlap and hence, it becomes necessary for us to interpret in such a manner that the activities are put in the appropriate basket and to justify our decision to do so. Further, in the light of the possible overlapping, we have to consider the scope and meaning as clarified in the above Circular and Trade Notice. 17.1 Section 65(105)(g) requires that a consulting engineer s service be a service rendered by a consulting engineer. In turn, the definition of the term consulting engineer under section 65(31) contemplates two kinds of persons: a professionally qualified engineer on the one hand, or, on the other, a body corporate or a firm. The reason for this is that the law seeks to include services rendered by juridical persons who are not natural persons even though such juridical persons are not capable of holding the qualific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. There is some congruence, for example between financial management in the statutory definition and the financial services being rendered by the foreign entity. Similarly, marketing management brings advertising within its scope. Other services such as insurance and legal services will fall within the residuary limb, especially because these are not purported to be provided directly or with any professional expertise. It is not as if the foreign enterprise is itself an insurer or a lawyer. It appears that it will only make those services available to the Appellant. 20. In view of our above discussions, 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. 21.1 Learned Advocat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lf 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, we hold that the appellant has made out a case for interference insofar as the invoking the larger period of limitation is concerned. Thus, we partly allow this ground of appeals insofar as they relate to the period of limitation. To ascertain, however, the tax liability for the normal period, this issue, to this extent, is remitted to the file of adjudicating authority. 24.1 Now, we shall consider the issue of includability of TDS amount in the value of taxable services. Section 195 of the Income tax Act, 1961 deals with Tax to be deducted at source when payment is made to non-residents or foreign companies. This is basically to plug revenue loss that may occur if by any chance the non-resident doesn t file income tax return in India. Further, under said section, such sum alone is taxable which has the character of income . Thus, 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 busines ..... X X X X Extracts X X X X X X X X Extracts X X X X
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