TaxTMI 
TaxTMI 
2013 (12) TMI 492
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....Taxable Transaction Period of dispute Taxable category Demand Rs. Interest Rs. Penalty Rs. Engineering * design, Project Management and Back Office Support Service by SEZ unit to EPC unit located in DTA. 1-11-2009 to 31-8-2010. Support Services of Business or commerce. 1,65,83,031 17,07,783 *200 per day for default period u/s.77(1)(a). *5000 u/s.77(1)(d). *2,70,00,046 u/s.78. Consulting Engineer's Service 1,04,17,015 2. The appellants are engaged in execution of Lump sum turnkey contracts for setting up plants and other facilities and providing services of design and engineering, procurement, project management and project supervision, information technology and information technology enabled service. The two appellant's units have been set up for providing engineering and design service, project management services and services of back office operations and both the units are located in SEZ. The SEZ units also carry out work in-house for the units located in Domestic Tariff Area (DTA) of L & T Ltd. Proposal to levy service tax on SEZ units was made on the ground that the units located in SEZ and DTA units of L & T are separat....
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....re is no definition of "person" in service tax law, but there is definition of "person" in Section 2(5) of SEZ Act, which includes any agency, office or branch. As per Section 51 of the SEZ Act, the provisions of this Act shall have effect, notwithstanding anything inconsistent therewith contained in other law for the time being in force. Thus, the SEZ act has overriding effect and, accordingly, L & T SEZ unit is a distinct legal person in terms of Section 2(5) of SEZ Act. (vii) The rulings of Hon'ble CESTAT in Precot Mills Ltd. v. CCE, Tirupati, 2006 (2) S.T.R. 495 (Tri.-Bang.), Indian Oil Corporation Ltd. v. CCE, Patna, 2007 (8) S.T.R. 527 (Tri.-Kolkata), and Chemplast Sanmar Ltd. v. CCE, Salem, 2009 (15) S.T.R. 151 (Tri.-Chennai), in which it has been held that there cannot be any service between two units of the same legal entity, are not applicable to the appellant's case. This is for the reason that in these cases, one of the units was not located in SEZ. Moreover, the commercial consideration was not collected by way of debit note, but by valid invoices and separately accounted in the books of accounts. (viii) The definition of taxable service refers to any service pro....
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....eeing to treat the units in SEZ as separate legal entities, the appellants cannot submit that for the purpose of levy of service tax, the units in SEZ have to be treated differently. He relies upon the decisions of the Tribunal to submit that even in the case of goods transferred to another unit, provisions of valuation rules under Central Excise have been made applicable, despite the fact that they are not separate legal entities. He relies upon the decision in the case of RPG Enterprises Ltd. [2008 (11) S.T.R. 488 (Tri.-Mumbai)] to submit that services rendered by a group company acting more as a coordinator as pleaded was not accepted. It was held that the services provided by a group company to another company is liable to service tax. It is his submission that this decision is applicable to the facts of this case. He also submits that observations of the Commissioner that there was an agreement between the SEZ under DTA unit would show that the two units have been treated as separate legal entities by the appellants themselves and having considered the units as separate legal entities, the conclusion of the Commissioner cannot be otherwise. He further submits that as upheld by....
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....ne Unit, it shall have two distinct identities with separate books of account, but it shall not be necessary for the Special Economic Zone unit to be a separate legal entity." "(v) "person" includes an individual, whether resident in India or outside India, a Hindu undivided family, co-operative society, a company, whether incorporated in India or outside India, a firm, proprietary concern, or an association of persons or body of individuals, whether incorporated or not, local authority and any agency, office or branch owned or controlled by such individual, Hindu Undivided Family, co-operative, association, body, authority or company." 8. The definition of person reproduced above would mean that what is considered as a person is a juristic person according to the above definition. According to this definition to become a person, person includes an association of persons or body of individuals whether incorporated or not. No doubt, it is not necessary that the unit has to be considered as separate person just because the body of a person is not incorporated which applies to the present case. However, the definition of person in the case of association of person or a corp....
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....il Corporation Ltd. v. CCE, 2007 (8) S.T.R. 527 (Tri.), the Hon'ble Tribunal has followed the same principle and set aside the demand of service tax in respect of activities which had been performed by one part of the appellant-company for another part. (iv) In Government Wood Works v. State of Kerala, 1988 69 STC 62 (Ker), K.C.P. Ltd. v. State of Andhra Pradesh, (1993) 88 STC 374 (AP) and Nuclear Fuel Complex v. State of Andhra Pradesh, (2011) 42 VST 273 (AP), the Hon'ble High Court has held that there cannot be any transaction for sale of goods between two units of the same legal entity. This is notwithstanding the fact that the cost of the goods are debited to the accounts of the receiving unit and credited to the transferring unit. The effect of registration under sales tax law for the units is to enable the dealer to collect tax payable by him from the purchaser. It does not have the effect of carving out an independent existence for the registered unit or to delink it from the other units for the purpose of sales tax law. (v) In ABN Bank N.V. v. Assistant Director of Income Tax, (2006) 280 ITR (AT) 117 (Kolkata) (SB), the Special Benc....