Whether professional services rendered by in IIT Engineer is treated as Market Research Agency Service?

PJ/CASE LAW/2015-16/2843

Case:-METAL DEVELOPMENT CO.VERSUSCOMMISSIONER OF C. EX. & S.T., MUMBAI

Citation:-2015 (40) S.T.R. 545 (Tri. - Mumbai)

Brief facts:A Show cause notice was issued to the appellant demanding Service tax of Rs.45000/- on the ground that the appellant is engaged in engaged in conducting marketing research in relation to steel products. Hence providing market research agency service. The adjudicating authority confirmed the demand with interest and also imposed penalties. The appellant filed appeal against the order and the Commissioner (Appeals) dismissed the appeal. Hence the present appeal.

Appellant’s contention:- The bench directed the appellant 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 by M/s. Kalyani Carpenter whereby the payments were made to the appellant. The appellant submitted that being an IIT Engineer, M/s Kalyani Carpenter engaged him for consultancy in respect of metal development and payments were made as professional fee in respect of metal development as per the document produced.
The appellant also submitted that in reply to the show cause notice the appellant specifically mentioned that his job was of an industrial sales man and he carries brochures of the company to various prospective buyers, gave the information about products and facilities available and requested them to try out company’s product. In view of this, the contention was that the appellant had not provided any market research agency service.

Respondent’s contention:- Revenue relied upon the findings of the lower authority and submitted that the appellant had provided taxable service of market research agency service. Hence it was contended that the demand was rightly made.

Reasoning of judgment:- It was found 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 was also in respect of professional fee for metal development. In view of this, it was found that the appellant had not provided any taxable service in respect of market research agency service.

Decision:-Appeal allowed.

Comment:- Professional Services provided by an IIT engineer in respect of metal development are not to be treated as market research agency service. Moreover, the services provided as a sales man to convince buyers to try the product also do not constitute market research agency service.

Prepared by: Sharad Bang

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PJ/CASE LAW/2015-16/2843

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