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The article explains that recovery of jointly incurred advertising costs under a cost sharing agreement did not amount to a taxable Business Auxiliary Service because there was no provider recipient relationship or rendition of service to the foreign group company. The arrangement obliged the taxpayer to pay third party vendors and seek reimbursement of the other party's agreed share on production of claims; no markup, profit or separate consideration was charged. Consequently, absent consideration or a taxable service, the receipts were not exigible to service tax and export of service rules were inapplicable, leading to relief against assessment and penalties.
The article explains that recovery of jointly incurred advertising costs under a cost sharing agreement did not amount to a taxable Business Auxiliary Service because there was no provider recipient relationship or rendition of service to the foreign group company. The arrangement obliged the taxpayer to pay third party vendors and seek reimbursement of the other party's agreed share on production of claims; no markup, profit or separate consideration was charged. Consequently, absent consideration or a taxable service, the receipts were not exigible to service tax and export of service rules were inapplicable, leading to relief against assessment and penalties.
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