2012 (12) TMI 880 - AT - Service Tax

Service tax demand for appellant partly rejected by Tribunal due to lack of separate legal entities

The Tribunal held that the service tax demand against the appellant for the period 15/12/2007 to 10/09/2008 was not sustainable due to the divisions ... Logistic services - service tax demand along with interest and penalties - appellant are logistic division of M/s. Mahindra and Mahindra Limited who providing various logistics services to another division - period is question from 15/12/2007 to 31/03/2010 - Held that:- Considering the submissions made by the Chartered Accountant it is found that Mahindra and Mahindra Limited is a legal entity which is having two separate divisions. Merely by taking two separate service tax registrations it cannot be said that both are separate legal entities. Therefore, demand for the period 15/12/2007 to 10/09/2008 is not sustainable. For the remaining period, the matter needs examination by the adjudicating authority after obtaining reports from the Range Superintendent of Mumbai whether the appellant has paid the service tax or not - matter remanded back to the adjudicating authority for the period 11/09/2008 to March, 2010 thereafter to pass an appropriate order in accordance with law. Issues:1. Service tax demand against the appellant for providing logistic services.2. Whether the appellant paid service tax for a specific period.3. Legal entity status of divisions within Mahindra and Mahindra Limited.Analysis:Issue 1: Service tax demand against the appellant for providing logistic servicesThe appellant was facing a service tax demand of Rs.82,17,904/- along with interest and penalties for providing logistic services. The Tribunal decided to proceed with the appeal without pre-deposit to verify if the appellant had paid the service tax for a certain period, thus waiving the requirement of pre-deposit.Issue 2: Verification of service tax payment for a specific periodThe appellant, a logistic division of Mahindra and Mahindra Limited, was providing logistics services to the Farm Equipment Sector Division of the same company. The demand for service tax for two different periods was contested. The Tribunal found that for the period 15/12/2007 to 10/09/2008, where both divisions had separate service tax registrations, the demand was not sustainable as having separate registrations did not make them separate legal entities. However, for the period 11/09/2008 to March 2010, the matter was remanded back to the adjudicating authority for verification of service tax payment by the appellant.Issue 3: Legal entity status of divisions within Mahindra and Mahindra LimitedThe appellant argued that despite having separate service tax registrations, both divisions were not separate legal entities as they were part of Mahindra and Mahindra Limited. The Tribunal agreed that merely having separate registrations did not establish them as separate legal entities. The case highlighted the importance of verifying the payment of service tax by the appellant for the relevant period, emphasizing the need for proper documentation and compliance.In conclusion, the Tribunal held that the demand for the period 15/12/2007 to 10/09/2008 was not sustainable due to the legal entity status of the divisions within the company. However, the matter regarding service tax payment for the period 11/09/2008 to March 2010 was remanded back for further verification by the adjudicating authority. The appeal and stay application were disposed of accordingly.