B.S.V. Murthy, Member (T) - (1.) THE issue involved in this case is whether the appellant, a Government of Karnataka Undertaking/Organization is liable to pay Service Tax on the processing fee (according to them) collected by them is liable to Service Tax under 'Management or Business Consultancy Services' or not. The learned Counsel submitted that according to the website of the appellant, the appellants undertake to provide an environment that helps investors handle investment processes and procedures with case, identify, inform, promote, organize, facilitate, accelerate. According to the website they proposed to achieve this by dissemination of information through print and electronic media, creation and acceleration of industrial tempo, identifying and encouraging prospective investors, providing information to investors and entrepreneurs on the opportunities available in Karnataka for industry, trade and commerce, functioning as the Secretariat for the State Level Single Window Clearance Committee, publishing of data in the form of papers, case studies, reports, brochures, pamphlets, periodicals, digests, journals, project reports, profiles and magazines, organizing, sponsoring, associating and participating in trade fairs, exhibitions, etc. On the ground that appellant is liable to pay Service Tax on the processing fee collected by them in providing services such as escorting the entrepreneurs to various places to identify locations available for setting up of industry, processing of their applications to various departments, assisting them in setting up industry which amounts to provision of Management or Business Consultancy Services, demand for Service Tax of Rs. 2,58,40,805/ - for the period from October, 2006 to March, 2012 has been confirmed. Besides demand with interest, penalties under various Sections of Finance Act, 1994 have also been imposed. After considering submissions of both the sides and going through the records, we came to the conclusion that the matter can be straightaway finally decided especially in view of the fact that the issue is no longer a recurring issue and after 1 -7 -2012 with the introduction of negative list, the appellant may not be liable to pay Service Tax at all. With the consent of both the sides, we take up the appeal itself for final decision.
(2.) THE definition of 'Management or Business Consultancy Service' is as under: As per the provisions of Section 65(105)(r) of the Act, "taxable service in relation to 'Management or Business Consultancy Service' means any service provided or to be provided to any person by a management or business consultant in connection with the management of any organization or business in any manner." It was the submission of the learned Counsel that the activities of the appellant is providing assistance before industries are set up. They did not provide any consultancy service. However we cannot go by the understanding of the layman as to what is a 'Management or Business Consultancy Service'. We have to go by the definition. According to the definition, any person engaged in providing any service either directly or indirectly in connection with the management of any organization or business in any manner is providing Management or Business Consultancy Service. The inclusive portion coming thereafter can be considered as an expansion of the definition and therefore, any service provided in connection with the management or business is liable to tax. Management of business no doubt would start right from identification of a place to set up business and it cannot be said that management will start only after everything is done. Therefore, when the appellant collects processing fee for various services which are required for setting up of industry, we can take a view that it amounts to rendering of the service of business consultancy. Nevertheless being a Government organization and further there can be two views as whether the service provided by the appellants is Management or Business Consultancy or not and therefore, it may not be appropriate to invoke extended period. Therefore, in our opinion the demand cannot be sustained beyond the normal period of limitation. In view of the above discussion, we consider that the impugned order has to be upheld only as regards the liability to pay Service Tax for the normal period with interest on the amount received as processing fee from the investors/entrepreneurs who approach the appellant. Under the circumstances penalties imposed also cannot be sustained. The appeal is disposed of in the above terms. (Operative portion of the order has been pronounced in open Court on 24 -9 -2014);