TMI Blog2024 (1) TMI 983X X X X Extracts X X X X X X X X Extracts X X X X ..... sist M/s. Manyata Promoters Pvt. Ltd. in implementation and completion of the project. Therefore, the claim of the appellant that they have been appointed to execute the project has been rightly rejected by the learned Commissioner as the activities/performance stipulated under the Agreement clearly discloses that the services rendered in the management of the project for its completion by engaging suitable contractors, subcontractors, team of professional, obtaining approvals etc.; thus, in the nature of advice, consultancy or technical assistance. No contrary evidence has been placed by the Appellant to rebut the said finding of the Commissioner. In the present case, commencing from identification of the contractors, sub-contractors, professional team, day-to-day management of cash flow, completion of the project in accordance with plan, etc., with active participation and advice of the appellant from time-to-time rendered to M/s. Manyata Promoters Pvt. Ltd., fall within the scope of advice, consultancy or technical assistance - The claim of the Appellant that it becomes taxable only with effect from 01.06.2007 under the Management or Business Consultancy Service is not sust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and fifteen only) being the service tax (inclusive of education cess) payable under the category Management Consultancy Service for the period from 2004-05 upto 05/2007. ii. I appropriate the amount of Rs.5,39,67,516/- (Rupees Five crores thirty nine lakhs sixtyseven thousand five hundred and sixteen only paid by M/s DDPL vide challans dt.18/02/2010 20/04/2010 towards the demand confirmed as at (i) above. iii. I order payment of appropriate amount of interest on the service tax above under section 75 of the Finance Act, 1994. iv. I appropriate the amount of Rs.52,88,640/- (Rupees Fifty two lakhs eighty eight thousand six hundred and fourty only) paid by M/s. DDPL vide challan dt.18/03/2010 towards the demand of interest confirmed as at 'iii' above. v. In respect of the demand confirmed at (i), I impose penalty of Rs. 100/- per day upto 17.04.06 and with effect from 18.04.06, Rs.200/- per day or @2% the service tax, per month, whichever is higher, till the date of actual payment of the outstanding amount of service tax, which shall not exceed the total service tax liability confirmed as above, under section 76 of the Finance Act, 1994, vi. I impo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith effect from 01.6.2007. Hence, they were not required to discharge Service Tax for the service rendered during the said period. Further, it is argued that the services provided against the agreement dated 31.3.2005 being executory in nature and not management consultancy, therefore, no service tax is payable by them. Referring to the agreement dated 31.03.2005, the learned Sr. Advocate submitted that the services are not in the nature of advice, consultancy or technical assistance alone. The responsibility, role and function of the appellant in its entirety as per Clause 8 of the said agreement reveal a major role and responsibility of the appellant in execution of the project. It is submitted that the adjudicating authority had ignored the said submission of the appellant. In support, the learned Sr. Advocate referred to the following decisions: a. Basti Sugar Mills Co. Ltd Vs CCE, 2007 (7) STR 431 (T). Maintained by the SC in 2012 (25) STR J.154 (SC). b. Rolls Royce Indus Power (1) Ltd Vs CCE, 2006 (3) STR 292 (T) c. Nirulas Corner House Pvt. Ltd Vs CST, 2009 (14) STR 131 (T) d. Suzlon Windfarm Services Ltd Vs CCE, 2014 (33) STR 65 (T) e. CMS (1) Operat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot advisory in nature. 3.4 Further, he submits that since the Commissioner has placed reliance only on the agreement dated 31.03.2005, hence the statements based on other two agreements are of no consequence to determine the taxability and classification of service or imposition of penalty. Further, he has submitted that the allegation of fabrication of documents are not relevant to determine the tax liability of services under Management Consultancy Service as the Commissioner chose to ignore other two agreements and simply proceeded with the agreement dated 31.03.2005. Further, the learned advocate submitted that the amount paid during the course of investigation with the department should not be treated as admission of liability or guilt. Further, they have submitted that collection of taxes from M/s. Manyata Promotors Pvt Ltd. for certain period cannot lead to the inference that services rendered by the appellant are taxable. It is his contention that there is no estoppel in law and in support he referred to the judgment of the Hon ble Supreme Court in the case of Kalidas Dhanjibhai vs. State of Bombay: AIR 1995 SC 62 and Sports Club of Gujarat Ltd. vs. UOI: 2010 (20) STR 17 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e essence remains the same. Explaining it further, he has submitted that before 01.5.2006, it included consultancy, advice or assistance which consisted of conceptual designing, etc., of any working system of any organisation. This definition focused on what the service provider was actually doing (conceptualising, designing, development, modification, rectification) in relation to any working system. After 01.5.2006, various working systems of an organisation are spelt out viz., financial, logistics, human resources, marketing, procurement, etc.. Any technical advice or consultancy in these fields or in other similar area of management was treated as Management Consultancy Service. The claim of the appellant that their company is for development of real estate projects and hence, it cannot be inferred that they were providing Management Consultancy Service, is not acceptable. It is the service provided by the appellant which is relevant and not the activity of the appellant in general, which has been specifically discussed by the learned Commissioner in para 14 of the order. 4.2 Referring to Clause 7, 8 and 8.8 of the agreement dated 31.03.2005, the learned Authorised Represent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... invoked the extended period of limitation and confirmation of duty demand along with interest and imposition of penalties. Further, he has also submitted that the Commissioner was right in not extending the benefit of CENVAT credit in the impugned order in absence of documents/evidences submitted by the appellant. 5. Heard both sides and perused the records. 6. The issues involved in the present appeal for determination are whether: (i) The service rendered by the appellant during the period 2004-05 to May 2007 to M/s. Manyata Promoters Pvt. Ltd. M/s. Golf Link Software Park Pvt. Ltd. be classified under taxable category of Management Consultancy Service and Service Tax is payable invoking extended period of limitation; and (ii) CENVAT credit be admissible for the said period in rendering the service, if held to be taxable. 7. The appellant during the relevant period rendered services to M/s. Manyata Promoters Pvt Ltd and M/s. Golf Link Software Park Pvt. Ltd. and received consideration for providing such services. Three agreements claimed to have been entered into between the appellant and the said service receivers dated 06.04.2003, 31.03.2005 and 01.04.2005. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anies Act, 1956, having its registered office at Second Floor, Classic Courts, Richmond Road, Bangalore - 560 001, represented by its Chairman and Managing Director Mr. Reddy Veeranna for the FIRST PART (hereinafter referred to as the MANYATA which expression shall, the context means and requires shall include its successors-in-title and assigns). AND M/S.DYNASTY DEVELOPERS PRIVATE LIMITED, a Company incorporated under the CompaniesAct,1956,having its Office at Embassy Point, No.150, Infantry Road, Bangalore - 560 001,represented by its Director Mr. Jitendra Virwani (hereinafter referred to as the PROJECT DEVELOPMENT MANAGER , which expression shall, wherever the context means and requires shall include its successors-in-title and assigns). NOW THIS AGREEMENT WITNESSETH AS UNDER: 1) REPRESENTATIONS AND ASSURANCES I. WHEREAS MANYATA are the allottees under Lease Cum Sale agreements all executed by Karnataka Industrial Area Development Board (KIADB) and MANYATA and the KIADB have also vide separate possession letters handed over possession of the property allotted on the Lease cum sale basis of all that piece and parcel of industrial lands in situated in vario ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring several permission for the Development. 2.3) Planning Application means the application for sanction and permission to carry out the Development made to the Local Planning Authority or to be made by the Project Development Managers at the expense MANYATA or any alternative application or variation or amendment to an application made which may subsequently be required to make; 2.4) the Building Contractor means a Contractor of suitable experience with adequate financial resources and good reputation to be appointed under the Building Contract by MANYATA to carry out the construction activities and the related Development; 2.5) the Building Contract means a contract to carry out the Development to be made between (1) MANYATA and (2) the Building Contractor: 2.6) Development means the carrying out of the works necessary to secure the erection and completion on the Site of the Project consisting of buildings, all the Individual Units and their infrastructure with the planning permission obtained in response to the planning Application and the Plans and where the context so admits and requires the completed Individual Units and their infrastructure and a brief d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and MANYATA shall then use all reasonable endeavours to obtain the sanction for the plan submitted for the Development asper the Application, subject to the conditions which are levied. The Project Development Managers will provide the copy of all the relevant plans as per the schedule of development and also render the necessary assistance in the process of plan approval. 4) SITE OFFICE: MANYATA will permit Project Development Managers to establish a Site Office on the Schedule Property. The expenses of running and maintenance of this site office will be the responsibility of PDM. 5) CONSIDERATION FOR THE PERFORMANCE OF THE MANAGER'S FUNCTIONS AND OBLIGATIONS: 5.1 Project Development Managers shall perform the functions and obligations on his part specified in this Agreement in consideration of the payment of: 5.2) Project Development Managers' Fee being computed as under: 5.2.1 The MANYATA shall pay the Project Development Manager 5% (Five per cent) of the expenditure incurred on the construction and development of the PROJECT plus the service tax at the rate or rates in force from time to time as consideration for rendering all the services specifie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Development, from time to time; 6.3 Ensure that at all times during the Development adequate, competent and suitably qualified and experienced staff of Project Development Managers are employed properly to perform the functions and obligations of Project Development Managers under this Agreement; 6.4) Fix Meeting wherein Project Development Managers shall provide all the necessary information with regard to the progress of the development which shall be recorded and signed by Project Development Managers and MANYATA or their respective representatives; 7) MANYATA TO ENTER INTO THE BUILDING CONTRACT: If necessary, MANYATA shall enter into a Building Contract recommended by the Project Development Manager with a Building Contractor for the Development of the PROJECT 8) SUMMARY OF THE PROJECT DEVELOPMENT MANAGER'S GENERAL FUNCTIONS ANDOBLIGATIONS: The Project Development Managers shall in addition to the Project Development Managers specific functions and obligations under any other Clause: 8.1) supervise and co-ordinate all aspects of the Development and without prejudice to and in addition to the generality supervise and co-ordinate the activities of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Services 9) LICENCE TO THE MANAGER: During the period of development, as long as there is no breach of the terms of the agreement, the Project Development Managers shall have irrevocable licence and authority to enter upon the site for the purpose of carrying out its functions and obligations under this Agreement without reference to MANYATA; 10) DEVELOPMENT PLANNING. Project Development Managers shall during the development be entitled to take decisions on planning the implementation of the contract, execution of the work, the priority of works to be done changes to be made in any works items and the day to day management of the development of the project which in the opinion of the PDM is reasonably necessary for the purpose of progress of the Development 11) ALTERATIONS RECOMMENCED BY THE PROFESSIONAL TEAM: In the event of the Professional Team recommending any alteration to the Plans or the Specifications, the Project Development Managers shall in consultation with the professional team approve such alterations ;(provided such alterations are not in conflict with the overall development plan) 12) TERMS OF EMPLOYMENT OF NECESSARY PERSONS: 12.1) MANYAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilding Managers shall prepare and finalise accounts for the said Building and on such finalisation of accounts for the said Building and on such finalization of accounts, pay to Project Development Managers the balance amounts of the Management Fee after making adjustments for the advances, if any, received by the Project Development Manager: xxxxxxxxxxxxxxxxx 18) MANYATA TO PAY FEES ETC: MANYATA shall pay all fees, charges, fines, penalties and other payments which during the progress of the Development may properly be payable to any Authority, Statutory Body or any competent person in respect of the Development; xxxxxxxxxxxxxx 29.3) WHOLE AGREEMENT The Parties acknowledge that this Agreement and these conditions contain the whole Agreement between the parties and it has not relied upon any oral or written representations made; 29.4) SUPERSEDES PRIOR AGREEMENTS This Agreement supersedes any prior agreement between the parties whether written or oral and such prior agreements are cancelled as at the Commencement Date but without prejudice to any rights which have already accrued to either of the parties. 10. A plain reading of the agreement particularly C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant has been engaged to advise/assist M/s. Manyata Promoters Pvt. Ltd. in implementation and completion of the project. Therefore, the claim of the appellant that they have been appointed to execute the project has been rightly rejected by the learned Commissioner as the activities/performance stipulated under the Agreement clearly discloses that the services rendered in the management of the project for its completion by engaging suitable contractors, subcontractors, team of professional, obtaining approvals etc.; thus, in the nature of advice, consultancy or technical assistance. No contrary evidence has been placed by the Appellant to rebut the said finding of the Commissioner. 11. The judgment cited by the learned advocate for the appellant particularly Basti Sugar Mills Limited (supra), is not applicable to the facts and circumstance of the present case being on a different set of facts. In the said case by an agreement with Indo Gulf Industries Ltd., who took over the management of running of a sugar mill was alleged to be a Management Consultancy Agreement service and Service Tax was accordingly demanded from the assessee. Analyzing the various clauses of the Agreement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llants clearly fall within its scope and for that one only has to read the definition of Management Consultant quoted earlier vis- -vis the description of impugned services (detailed in para 2) to come to such finding. The expressions like any service , either directly or indirectly , in connection with the management , in any manner appearing in the definition of Management Consultancy Service are expressions which are expansionary rather than restrictive. Thus, this definition is wide enough to include advisory services rendered in connection with the management of an organisation. The services rendered to M/s. Transocean and M/s. Tide Water as enumerated earlier clearly show that predominantly predominant parts of the said services were advisory (not executionary) and the advices (services) were directly connected with the management of the companies the services were rendered to. The said advices (services) rendered related to conceptualizing, devising, development, modification, rectification or upgradation of the working system of the said companies. Advices on commercial aspects, current developments, import and export policy of India, potential problems and sol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me-to-time rendered to M/s. Manyata Promoters Pvt. Ltd., fall within the scope of advice, consultancy or technical assistance. Besides the statements of various persons recorded from time-to-time, reveal that the activities by the appellant acknowledge to be in the nature of managerial service rendered to M/s. Manyata Promoters Pvt. Ltd. Besides, we find that the appellant had collected Service Tax as per Clause 5.2.1 of the Agreement in few instances from M/s. Manyata Promoters Pvt. Ltd. but not paid the same to the department. Thus, the Project Development Management Fee collected by the Appellant squarely fall under the category of Management Consultancy Service and taxable service during the period under dispute. The claim of the Appellant that it becomes taxable only with effect from 01.06.2007 under the Management or Business Consultancy Service , in our view is not sustainable in view of the facts and circumstances of the case discussed as above. 17. The next issue to be addressed is whether extended period of limitation could be invoked against the appellant for recovery of duty. The learned Commissioner in the impugned order while confirming the demand for extended p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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