SWARAJ MAZDA LTD. Vs. COMMISSIONER OF C. EX.

JUDGEMENT

(1.) LEARNED Counsel Shri Narsimhan submits that granting licence for manufacture of lubricating oil and providing assistance for making sale thereof was not management consultancy and no taxable service provided. But revisional authority reversed such decision which was held in adjudication. The appellant entered into an agreement with M/s. Tide Water Oil Co. (India) Ltd. (in short TWO) on 11 -3 -2002 permitting the later to manufacture certain products using its brand name. While granting such permission there was also marketing assistance provided and such an understanding earned licence fee of Rs. 5/ - per liter to the appellant. When the appellant operated under this agreement (copy available at page 124 of appeal folder), the reviewing authority issued notice to review the dropped adjudication on the ground that there was provision of management consultancy service by the appellant. It was also submitted by Shri Narsimhan that the appellant is paying service tax under provision of intellectual property service category from 10 -9 -2004. Therefore, the nature of service provided cannot be management consultancy for no element of that service is present.

(2.) HEARD both sides and perused the record.

(3.) BARE perusal of the show cause notice (copy available at page 128 of appeal folder), shows that nowhere that brings out how the elements of management consultancy service exist. The revisional authority proceeded under mere assumption that there was management consultancy service provided. Without the show cause notice bringing the allegation to provide scope for defence, revisional authority passed an order holding management consultancy service provided. His examination was done from the angle of intellectual property right service provided. There is no whisper in the discussion as to how the appellant provided management consultancy service. We have looked into the taxing entry in Section 65(105)(r) of the Finance Act, 1994, which brings management consultancy service into the fold of service tax. Mandate of this entry is that service provided by management or business consultant in connection with the management of any organisation or business in any manner shall be management consultancy. This taxing entry read with the enabling definition in Section 65(65) of Finance Act, 1994 requires a service provider necessarily to be a management consultant and its principal activity should be so. Service Tax can be levied on the economic activity if such activity is declared by law taxable. By no stretch of imagination any activity can be taxed. In absence of existence of management consultant there is no scope to call the appellant as management consultant when terms of the agreement is read. Therefore revision order is liable to set aside. That is ordered accordingly and appeal is allowed.