A division bench of the Bombay High Court, last week, ruled that the Financial advisory does not fall under category of “Management Consultancy Services” and is classifiable under the “Banking and other Financial Services”.
In view of this, the bench comprising Justice AS Oka and Justice Riyaz Chagla clarified that the said services are, therefore, not taxable prior to 16th August 2002.
Assessee, in the instant case, had rendered “Financial Advisory Services” in respect of energy, banking, development, finance, transport and urban infrastructure, disinvestment and risk management. In respect of such services, they remitted service tax under the head “Banking and other Financial Services”.
The department took a stand that the said services are taxable under the head “Management Consultancy Services” under the Finance Act, 1994.
The bench after analyzing the definition of Banking and other Financial Services, noted that it includes Financial Advisory Services also.
“Insofar as “Management Consultancy Services” are concerned these have at all times been under the Finance Act and chargeable to service tax. This would be the case even after the inclusion of Advisory and Auxiliary Financial Services under “Banking and other Financial Services” on 16th August 2002. The definition of “Management Consultant” has also remained unchanged.”
The bench also relied on the Appellate Tribunal’s finding that the Board Circular dated 7th October 1998 categorically clarified that information and advisory services, if any, rendered by credit rating agency would not attract service tax.
Read the full text of the Judgment below.
