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TMI Blog2024 (1) TMI 983X X X X Extracts X X X X X X X X Extracts X X X X ..... irty 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 impose penalty of Rs. 1000/- (Rupees One thousand only) under section 77 of the Finance Act, 1994. vii. I impose penalty amounting to Rs. 8,15,12,315/- (Rupees Eight crores fifteen lakhs twelve thousand three hundred and fifteen only) under section 78 of the Fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ltancy, 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) Operations & Maintenance Co.P.Ltd Vs CCE, 2007 (7) STR 369 (T) f. CCE Vs Sahney Kirkwood Pvt. Ltd, 2014 (35) STR 609 (T) Maintained by the SC in Commr. Vs CMS (1) Operations and Maintenance Co. P. Ltd, 2017 //94) GSTL J.75 (SC) g. Vedanta Ltd Vs CCE, 2019 (28) GSTL 258 (T) 3.2 Furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 (Guj.). 3.5 Further, he has submitted that extended period of limitation cannot be invoked in the present case. Also, since the tax liability itself does not arise because of the specific recitals in the agreement dated 31.03.2005, interest and penalty would not arise. Further, it is submitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onceptualising, 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 Representative has submitted that this service indicate advice and assistance rendered by the appellant, hence the services rendered by the appellant beyond the advisory role and purpose of other services like liasoning, coordination, obtaining approvals from authorities, etc., not covered under Management Cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. 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 impugned order the learned Commissioner rejecting the credibility of agreements dated 06.04.2003 and 01.04.2005, laid emphasis on the stipulations under agreement dated 31.03.2005. The appellant in their arguments did not object to the said course of action by the adjudicating authority, however, from the very beginni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itle 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 various survey Numbers all situated at Nagawara Village, Bangalore North Taluk, more fully set out and described in the First Schedule hereto and hereinafter referred to as the "PROPERTY" and the details of the Lease Cum Sale agreement and the Possession Certificate are also set out in the Schedule hereto against the lands defined therein; II. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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 description of the Development 2.7) "the Professional Team" means: 2.7.1) Architect/s who have to be appointed for the Development by MANYATA 2.7.2) Quantity Surveyors who are to be appointed for the Development by MANYATA 2.7.3) Structural Engineers who arc to be appointed for the Development by MANYATA 2.7.4) Building Services or Mechanical an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... val. 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 specified in this Agreement 5.2.2 Such consideration shall be decided annually on 31" March of a financial year on the basis of the audited accounts of the MANYATA. The amount of consideration shall become payable forthwith after it is determined subject to adjustments, if any, on account of advance withdrawals made by the Project Development Manager as stated hereafter. 5.2.3 The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... formation 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 Professional Team in respect of the Development; 8.2) use all reasonable endeavours to see that the Development is practically completed in accordance with the Plans and the Specifications (with such alterations as may be necessary and approved by MANYATA) and within the timeframe agreed upon 8.3) Project Development Managers shall provide from time to time cash flowcharts and estimate charts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll 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) MANYATA shall appoint as recommended by the Project Development Managers, the Building Contractor, all nominated Sub-contractors and/or specialist Sub-Traders the members of the Professional Team and all other third parties required to be appointed to carry out functions in connection with the Development all of whom are in Clause 12.2 called 'Necessary Persons'; But none of these personnel shall be deemed to be in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ines, 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 Clauses 5, 6, 7 and 8 of the Agreement dated 31.3.2005 which deal with the functions and obligations of the project manager in carrying out and implementing the agreement entered with M/s. Manyata Promoters Pvt. Ltd. reveals that the appellants are required to manage overall implementation of the project viz., the Software Technology Park for which the agreement had been entered between the appellant and M/s. Manyata Promoters Pvt. Ltd.. It st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 between the appellant with Indo Gulf Industries, the Hon'ble Supreme Court concluded that the appellant was entrusted the operation of the factory and various Clauses of the Agreement were to enable the appellant to perform the operation of the factory, smoothly. The Agreement is not for advice or consultancy. Contrary to the said facts, in the present case, the recitals in the Agreements acknowledges the expertise of the appellant in infrastru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ather 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 solutions, marketing strategies, alerting them about potential misuse of their IPRs, economic & political scenarios etc. were clearly applicable to and useful for the working systems of these companies (M/s. Tide Water & M/s. Transocean) and thus clearly fell within the ambit of role of 'management consultant' as defined earlier. Thus the impugned service clearly qualifies for the status of Management Consultancy Services; some of its minor fring ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces 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 period held that the appellant has not taken registration even though they have provided taxable service and also collected service tax by issuing debit notes to the service receivers; also during the financial year 2005-06 and 2006-07, income on account of services rendered reflected in their balance sheet under the head Project Management fees, thus they were aware of the applicability of service tax under the category of Management Consultancy serv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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