https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=765198 https://www.taxtmi.com/caselaws?id=765198 Levy of service tax - Business Support Service - cost sharing among the group Companies - Demand of service tax on the differential value of Profit Loss Account and ST-3 returns - Recovery of ineligible CENVAT Credit - Extended period of limitation. Levy of service tax - Business Support Service - cost sharing among the group Companies - HELD THAT:- The appellant incurred expenditure on behalf of the group companies and such expenditure has been shared among the group Companies at the ratio agreed in the agreement dated 01-04-2008. It is observed that there is no service element involved in this case. Thus, we find that in these circumstances, the demand of service tax under the category of Business Support Service is not sustainable. We find that the issue is no more res integra as the demand of Service Tax on cost sharing is settled by the decision of the Hon ble Supreme Court in M/S GUJARAT STATE FERTILIZERS CHEMICALS LTD. ANOTHER VERSUS COMMISSIONER OF CENTRAL EXCISE [ 2016 (12) TMI 103 - SUPREME COURT] , wherein, it has been held that demand of Service Tax on cost sharing is not sustainable - the demand confirmed in the impugned order under the category of Business Support Service is not sustainable. Demand of service tax on the differential value of Profit Loss Account and ST-3 returns - HELD THAT:- The ld. adjudicating authority has not given any finding regarding the liability of service tax on the differential value. It is the settled position of law that demand of Service Tax cannot be confirmed merely on the ground that there is a difference in the value of Profit Loss Account and ST-3 returns. This issue is covered by the decision of Tribunal, Kolkata in the case of M/S BALAJEE MACHINERY VERSUS COMMISSIONER OF CGST EXCISE, PATNA II [ 2022 (8) TMI 704 - CESTAT KOLKATA] where it was held that Since the records have been duly audited, the demand cannot be raised for the same period on account of change in the opinion. Further, we find that the Appellant had duly submitted the VAT Returns which have been recorded by the Ld. Commissioner in the impugned order. - the demand of service tax of Rs.88,051/-, confirmed merely on the basis of the differential value between the Profit Loss Account and ST-3 returns is not sustainable. Recovery of ineligible CENVAT Credit - Extended period of limitation - HELD THAT:- There is no allegation of suppression, wilful misstatement or fraud in the impugned notice. In the impugned order also, the ld. adjudicating authority has not given any finding regarding suppression of facts or wilful misstatement for invocation of the larger period of limitation. Thus, the demand confirmed by invoking the extended period of limitation is not sustainable - the demand of irregular credit confirmed in the impugned order is not sustainable. Conclusion - i) Service Tax cannot be levied on cost-sharing arrangements lacking a service element. ii) Demand confirmed merely on the basis of the differential value between the Profit Loss Account and ST-3 returns is not sustainable. iii) As entire demand is time barred, the demand of irregular credit confirmed in the impugned order is not sustainable. The impugned order set aside - appeal allowed. Case-Laws Service Tax Mon, 27 Jan 2025 00:00:00 +0530