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Service Tax cannot be levied on Merger and Acquisition Services till 2001: Bombay HC [Read Judgment]

Justices Abhay S. Oka and Riyaz I. Chagla of Bombay High Court recently ruled that Service Tax cannot be imposed on Merger and Acquisition Services for the period prior to 16th July 2001.

Before the High Court, the department contended that Merger and Acquisition Services come within the definition of Management Consultancy and would be included under Management Consultancy Services prior to 16th July 2001 and hence would be taxable.

The bench accepted the contentions of the assessee that “Merger and Acquisition Services” having been introduced for the first time as a separate category under Banking and other Financial Services with effect from 16th July 2001 would show that the said service was never a part of Management Consultancy Services which has been in existence at all times.

The bench noted that “Merger and Acquisition” is highly technical and a restrictive term and cannot be related to the managing of the affairs of the organisation which would come within the definition of “Management Consultant”.

Applying the decision of the division bench in Indian National Shipowners Association, wherein the Court has considered the issue of introduction of a new entry viz. mining service in the Finance Act and held that the levy of service tax on this service would be after the insertion of the new entry.

In view of the above decision, the Court held that service tax is payable on Merger and Acquisition Services only upon its insertion in the Banking and Financial Services with effect from 16th July 2001 and was not leviable prior thereto.

Read the full text of the Judgment below.

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