Intra-company activity without service to an outside person was treated as outside service tax demand, following precedent.

Service tax on intra-company activities was found inapplicable where one part of the assessee company performed work for another part of the same company and no service was rendered to any person outside the company. The Tribunal noted that the Department did not cite any contrary authority to displace the precedent relied on by the assessee. Applying that precedent, it treated the absence of service to an outside person as taking the activity outside the tax demand, and the demand was regarded as not sustainable in law.

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Issues: Whether service tax was payable on activities performed by one part of the assessee company for another part of the same company when no service was rendered to any person outside the company.

Analysis: The Tribunal noted that the assessee had not rendered any service to any other person and that the Department could not cite any contrary authority to displace the relied upon precedent. Applying the ratio of the cited decision, it held that the absence of service to an outside person took the activity outside the tax demand raised in the case.

Conclusion: The service tax demand was held not sustainable in law and the appeal was allowed.

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