By TIOL News Service

MUMBAI, JAN 08, 2018: BOTH, the assessee as well as the Revenue are in appeal against the order passed by the Commissioner(A).

The assessee challenges taxing of service of business promotion provided by it to the service recipient under the taxing entry of Business Auxiliary service. And further mentions that taxes and interest have been paid, therefore, if it is held to be taxable, penalty may be waived.

Revenue is in appeal against the same adjudication order submitting that the land development charges received by the assessee should be held to be taxable in the category of Management or Business consultancy service. The assessee refutes this claim and places reliance on the Tribunal decision in the case of SMS Infrastructure Ltd. Vs. CCE, Nagpur - 2017-TIOL-4046-CESTAT-MUM where it is held that land development charge received shall not be a constituent of management consultancy service.

The Bench extracted the meaning of the term Management or Business consultant and observed that the adjudicating authority had not examined the agreement between the parties while concluding against the appellant assessee and this was the basic legal infirmity in the adjudication process. Moreover, upon reading the definition, it was clear that the same did not cover land development charge within its fold to give rise to taxable event for the purpose of levy under Finance Act, 1994. Inasmuch as there would be no levy on the land development charge under the category of business and management consultancy, the CESTAT held.

As regards the tax demand under BAS in respect of promotion of business, the Bench upheld the stand taken by the lower authority of the same being taxable. Nonetheless, taking into consideration the fact that the appellant had discharged the tax liability with interest, the CESTAT waived the penalty imposed by relying on the principles laid down in the decision of the Allahabad High Court in the case of CCE vs. Auto World - 2010-TIOL-233-HC-ALL-ST.

Both the appeals were dismissed except for the grant of relief on penalty.

(See 2018-TIOL-103-CESTAT-MUM)