By TIOL News Service

MUMBAI, JAN 21, 2014: A SCN was issued to the appellant demanding Service Tax of Rs.45,000/- on the ground that the appellant is engaged in conducting marketing research in relation to steel products, hence are covered under Market Research Agency service.

As the lower authorities confirmed the demand and imposed penalties, the appellant is before the CESTAT.

On the last date of hearing, the Proprietor of the appellant firm was directed by the Bench to produce evidence in respect of compensation received from M/s Kalyani Carpenter Special Steels Ltd., Pune . In pursuance to the direction, the appellant produced a copy of the bank voucher issued. The appellant submitted that being an IIT Engineer, the client had engaged him for consultancy in respect of metal development and payments were made as professional fees. It was also submitted that his job was of an industrial sales man and he carries brochures of the company to various prospective buyers, gives information about products and facilities available and requested them to try out company's product. Inasmuch as since the appellant had not provided any market research agency service, no ST liability arises.

The Revenue representative submitted that the lower authorities were correct.

The Bench observed -

"7. We find that in reply to the Show Cause Notice the appellant specifically gave details of his activities which is not in respect of market research agency service. The payment made by M/s Kalyani Carpenter also in respect of professional fee in respect of metal development. In view of this, we find merit in the contention of the appellant that the appellant had not provided any taxable service in respect of market research agency…."

So, the order of the lower authority was set aside and the appeal was allowed.

(See 2014-TIOL-101-CESTAT-MUM)