CRISIL LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THE appeal and stay application are directed against the Order -in -Original No. 72/BR -72/S.T./Th -1/2011, dated 31 -10 -2011 passed by the Commissioner of Central Excise, Thane -I Commissionerate. The stay application is taken up for consideration. The appellant, M/s. CRISIL Limited, is registered with the department for service tax purposes under the category of 'Credit Rating Agency' since 1998. Apart from credit rating activity, the appellant also undertakes certain financial advisory services in respect of energy, banking, development, finance, transport and urban; infrastructure, disinvestment and risk management. The appellant have taken registration and paying service tax in respect of these advisory services under "banking and other financial services" w.e.f. 16 -8 -2002 when the term 'body corporate' was included in addition to banking and non -banking financial companies as the provider of such services. The department has accepted the classification of the service rendered by the appellant under banking and other financial services w.e.f. August, 2002. However, for the period 1999 -2000 to 2001 -02 a show cause notice dated 20 -2 -2003 was issued to them demanding service tax of Rs. 1,50,42,302/ - by proposing to classify the financial advisory services rendered by them under the category of 'Management Consultancy Service/The show cause notice was adjudicated and the service tax demand was confirmed along with interest thereon and also imposing penalties under Sections 76 and 77 of the Finance Act, 1994. It is against this demand, the appellant is before us.

(2.) THE learned counsel submits that there is no suppression alleged against the appellant in the show cause notice and, therefore, the demand is time barred. Secondly, he submits that when the credit rating agency services were brought under the tax net, it was clarified by the Board vide Circular No. B -11/3/98 -TRU, dated 7 -10 -1998 that information and advisory services, if any, rendered by credit rating agency would not attract service tax for the reason that a taxable service in respect of a credit rating agency means "service provided to a client only in relation to credit rating of any financial obligation, instrument or security". Therefore, they were under the bona fide belief that they were not required to pay any service tax on the information/advisory services rendered by them. The ld. counsel also submits that 'management consultant' means "any person who is engaged in providing any service either directly or indirectly in connection with the management of any organization in any manner and includes any person who renders any advice, consultancy or technical assistance relating to conceptualizing, devising, development, modification, rectification or upgradation of any working system of any organization". It is his contention, that by rendering financial advisory services, his client has not rendered any advice with respect to management of any organisation. He has also submitted a few copies of the agreements entered into by his client which are in relation to advisory assistance in selection of sub -concessionaire for development of solid cargo facilities at Dahej Port with Petronet LNG Limited, techno economic and financial feasibility report for Chandigarh -Ludhiana highway project with Dalai Consultants and Engineers Ltd., study on the excise duty structure in the cotton and man -made textile sectors with Indian Cotton Mills' Federation; business valuation and re -valuation of assets of a ferrochrome plant of IDCOL with Adam Smith Institute, etc. From a perusal of these agreements, it can be seen that the services rendered by them has nothing to do with management of any organisation. He also relies on the decisions of the Tribunal in the case of Punjab Venture Capital Ltd. v. Commissioner of Central Excise, Chandigarh, : 2011 (24) S.T.R. 410 and HSBC Securities & Capital Markets (I) Pvt. Ltd. v. Commissioner of Service Tax, Mumbai, : 2009 (13) S.T.R. 62 in support of his contention.

(3.) WE have carefully considered the rival submissions. There is no dispute of the fact that w.e.f. 16 -8 -2002, the appellant has been paying service tax on the advisory services under the category of 'Banking and Other Financial Services' and the department has accepted the same. That being so, we do not know how for the previous period the department can demand service tax on the very same activity under the category of 'Management Consultancy Services.' Further, this Tribunal in the case of HSBC Securities & Capital Markets (I) Pvt. Ltd. (cited supra) held that advisory and due diligence services on acquisition of shares in listed companies rendered to an existing organization cannot be considered to be 'Management Consultancy Service' in relation to developing or upgrading of any working system in any organisation. Similarly, in the Punjab Venture Capital Ltd. case (cited supra), consultancy of fund management including the identification of the projects was held not falling under management consultancy services. From the agreements entered into by the appellant with their clients, it is seen that the feasibility study of highway projects or study of excise duty structure of the textile sector or business valuation and re -valuation of assets etc. do not come under the category of developing or upgrading any working system in any organisation. Thus, prima facie, we are of the view that the appellant has made out a strong case in their favour for waiver from pre -deposit of the dues adjudged. Accordingly, we grant unconditional waiver from pre -deposit of the dues adjudged against the appellant and stay recovery thereof during the pendency of the appeal.