M/S. Forbes Polymetron P. Ltd vs Commissioner Of Central Excise, Pune I

(Arising out Order-in-Appeal No. PI/RKS/127-128/2012 dated 28.05.2012 passed by the Commissioner of Central Excise (Appeals), Pune I)

For approval and signature: Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. C.J. Mathew, Member (Technical)

1. Whether Press Reporters may be allowed to see No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy Yes of the Order?

4. Whether Order is to be circulated to the Departmental Yes authorities?

M/s. Forbes Polymetron P. Ltd. Appellant

Vs.

Commissioner of Central Excise, Pune I Respondent

Appearance:

Shri S.S. Gupta, CA for the appellant Shri R.K. Das, DC (AR) for the respondent

CORAM:

Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. C.J. Mathew, Member (Technical)

Date of hearing : 15-09-2015 Date of decision : 15-09-2015

O R D E R No:..

Per: M.V. Ravindran:

This appeal is directed against Order-in-Appeal No. PI/RKS/127-128/2012 dated 28.05.2012.

2. The relevant facts that arise for consideration are that during the period 16.06.2005 to 30.09.2009 the appellant herein had, as a associate company of group of M/s. Krohne Marshall P. Ltd., Jain Marshall P. Ltd. etc. had collected/recovered some amounts towards the services rendered by the employees to the group companies but did not discharge the service tax liability on such amounts collected. Audit group was of the opinion that the services rendered by the employees by the appellant to the group companies would get classified under Business Support Service, Management Consultancy Services and/or Manpower Recruitment Service & Supply Agency Service. The appellant did not agree with the finding in the audit report hence show-cause notice was issued to the appellant for demand of service tax liability of `16,81,858/-, the interest thereon and the show-cause notice also sought to impose penalties. Appellant contested the show-cause notice on limitation as well as on merits. Adjudicating authority did not agree with the contentions raised by the appellant and confirmed the demands with interest and also imposed penalties. On an appeal, the first appellate authority also concurred with the view of the Adjudicating authority and rejected the appeal filed before him.

3. Ld. CA would take us through the entire case record. It is his submission that the appellant assessee had recovered certain amount but registered the same under salary and wages account for the services rendered by the employees. It is his submission that the services rendered will not fall under the category of Business Support Service, Management Consultancy Services or Manpower Recruitment Service & Supply Agency Service. It is his submission that the entire case is of revenue neutrality and appellant would have availed the Cenvat credit of the service tax paid, hence the extended period is incorrectly invoked. He would also submit that the definition of Business Support Service and Management Consultancy Services, if considered in correct perspective would not cover the services rendered by the appellants employees. He would submit that on merits if it is held against the appellant, at least the demands under the extended period be set aside, as also the penalties.

4. Ld. Departmental Representative on the other hand, would draw our attention to the findings recorded by both the lower authorities. He would submit that the employees of the appellant had rendered the services which would be categorised under Business Support Service as also Management Consultancy Services. He would submit that the appellant assessees contention is incorrect as to the non-invocation of extended period, inasmuch appellant had not indicated any details in the monthly returns filed.

5. Considered the submissions made at length by both sides and perused the records.

6. On perusal of the record, we find that there is no dispute as to the fact that appellants employees are rendering various services to the group companies; appellant is also recovering some amount from the group companies and recording the same as receipts under salary and wages. It is to be noted that the show-cause notice in the case in hand seeks to demand the service tax liability under Business Support Service and Management Consultancy Services for the substantial amount and a small amount towards Manpower Recruitment Service & Supply Agency Service. We find that the services rendered by the employees of the appellant are in respect of running the business of the group companies efficiently. The top most level of the employees to the middle management and lower management levels of the employees are rendering the services which could be in support of the business of the group companies as also the advisory function in respect of various departments. In our view, the lower authorities, in this case has correctly classified the services rendered by the employees of the appellant under Business Support Service and Management Consultancy Services. We do not find any reason to interfere in such a reasoned order by the lower authorities. Accordingly, we hold that the services rendered in this case by the appellant employees are liable to service tax and the tax liability and the interest thereon as confirmed by the Adjudicating authority and upheld by the first appellate authority are correct and no interference is called for.

7. As regards the claim of the ld. CA that the entire exercise is revenue neutral and the demand for the extended period should be set aside; we find no substance in such argument put forth by the CA. In view of this, we reject the submission and uphold the demands raised for the material period.

8. As regards the penalty, we do find same merits as the appellant could have had entertained a view as to the taxability of the service under various head. The issue being of interpretative nature, we find that the appellant need not be visited with penalties as imposed by the lower authorities. Accordingly, invoking the provisions of section 80 of the Finance Act, 1994, we set aside the penalties imposed on the appellant.

9. The appeal is disposed of as indicated hereinabove.

(Operative part pronounced in Court)

(C.J. Mathew) (M.V. Ravindran) Member (Technical) Member (Judicial)

//SR

5 ST/592/12