service tax liabilities when expenses recovered by sister concern against wages & salaries of staff

[P Ovhal]

Dear Experts,
Service Tax liable when one company had reimburse Staff salary & wages expenses from its sister concern. i.e. Employees/Staffs on the pay roll of one company also happens to look after the work of sister concern of that company which is separately registered with CE & ST Dept. Now both companies are merged.
Can this company need to pay Service Tax of Reimbursed Amount as provided Services to its sister concern.
Please suggest any Judgment /notification.

Rregards

PRO

AI Summary

Are reimbursed staff salaries between merged companies subject to service tax? CESTAT ruling suggests no tax if divisions, not separate entities. A discussion on whether service tax is applicable when a company reimburses staff salaries and wages from its sister concern. The query arises due to the merger of two companies, previously separately registered, and whether the reimbursed amount constitutes a taxable service. Expert responses reference a CESTAT ruling involving Tata Steel, indicating that service tax may not apply if the entities are not separate legal entities but divisions of the same company. Other replies suggest that shared expenses without markup do not attract service tax, but any added margins might be considered a service and thus taxable.