CCE Vs. SUNDARAM FINANCE LTD.

JUDGEMENT

(1.) THE respondents are a non -banking financing company. They entered a Joint Venture with a Dutch company to constitute M/s. Fiat Sundaram Auto Finance Ltd. (FISAF, for short), wherein the Dutch company held 51% shares and the respondent -company the remainder. Under the JV agreement, the respondent -company had an obligation to render the following services to FISAF: Credit processing or under writing : M/s. Sundaram Finance Ltd., would carry out the credit approval procedure in accordance with the credit policy laid down by the company in receiving, evaluating and processing applications of the customers; Loan documentation : This service includes obtaining and checking of loan documents from customers and dealers and record keeping of the same. Back office i.e. Portfolio Administration and Revenue Accounting Service : It covers provision of a computer based portfolio administration systems, transmission of information, creation of contracts and installment schedules, accrual processing of all contract financial elements, maintenance of detailed customer statement of accounts, arrears processing, handling of contract termination, foreclosures, re -scheduling and administration of personnel and sales tax functions. Information Technology and MIS Service : This category of service takes into account the maintenance of computerized information of the company's revenue accounting, guaranteeing date integrity, provision of a set of base customerised MIS reports and special reports. After Sales Service : This service provides for customer interaction for regular payments, early settlement, change of financial plan, change in customer date, insurance and other related miscellaneous services. Collection Service : This service includes provision of a collection system on the basis of guidelines laid down by the company in respect of collection, follow -up, reprocessing and legal proceedings. Under the agreement, the cost of providing the above services was to be reimbursed to the respondents by FISAF. When the department proposed to bring the above services within the purview of definition of "Management Consultancy" for the purpose of levy of service tax, the respondents got themselves registered and paid service tax of Rs. 1,24,786/ - under protest on the amount received as consideration for the above services. Later on, the respondents filed a refund claim by denying having rendered "Management Consultancy Service" to FISAF. The original authority rejected the refund claim, but the Commissioner (Appeals) allowed it. Hence the present appeal of the department.

(2.) HEARD both sides. Ld.SDR referred to the definition of "Management Consultancy" as given under Section 65(21) of the Finance Act, 1994 and submitted that the aforesaid services had been rendered by the respondents, directly or indirectly, in connection with the management of FISAF and hence squarely fell within the ambit of the said definition. She also pointed out that, in answer to a request made by the JV company (FISAF) for advance ruling on the question whether service tax was leviable on the aforesaid services rendered to them by the respondents, the Ministry (DGST) had informed FISAF that the said services would fall within the scope of "Management Consultancy" defined under Section 65(21) ibid.

(3.) LD .consultant argued in support of the appellate Commissioner's order, wherein it had been held to the effect that the respondent -company holding 49% share in FISAF was part and parcel of the day -to -day management of the latter and, therefore, the services rendered by the respondent -company to FISAF were in the nature of "internal organization and internal management", which did not attract the definition of "Management consultancy". Ld.consultant, further, claimed support from the Tribunal's decision in Glaxo Smithkline Pharmaceuticals Ltd. v. CCE Mumbai 2004 -TIOL -786 -CESTAT -Mum, wherein it was held that the reimbursements received towards "staff costs and other expenses and share services" by the appellant -company from their JV partner were held to be not taxable under "Management Consultancy" defined under Section 65 of the Finance Act, 1994.