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2017 (5) TMI 1252
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....ng with its amendment dated 24/04/2009 and Ledger Accounts maintained by them for the period up to 31/07/2011. The appellant also provided copies of their balance sheets for the year's 2008-09 & 2009-10. The following clauses of the agreement were taken notice of:- The OMC (Operation Management Cum-conducting Agreement) dated 15/12/2008 inter- alia, reads as under. The appellant has represented to M/s UBL that: (1) M/s MGW is the owner and is in possession of necessary and adequate facilities for manufacturing and bottling of beer at its own brewery located at Mohan Meakin Road, Daliganj, Lucknow, Uttar Pradesh together with plant and machineries, equipment and ancillaries installed thereat which is free from all encumbrances, charge or lien and there is no impediment of using it; (2) M/s MGW hold all requisite licences, permits and permissions lawfully or necessarily required under various Acts, Rules, Notifications, Guidelines, Orders etc. as may be prevailing and applicable for the time being in force in the State of Uttar Pradesh for manufacture, bottling storage and sale of Beer. (3) Manufacturing of the Beer shall be t....
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.... M/s MGW shall also be responsible to pay the following costs and raise a debit note on the 1st of every calendar month on M/s UBL for these reimbursements: • Cost towards supervisors, executives, workers, and contractors etc employed by the Noticee. • Insurance of equipments, Plant & Machinery, building, etc. • Repairs and maintenance and other fixed costs viz. travel, communication, telephone, administration, liaison etc. • Excise License & other fees. (However, if these Government fees and other levies increase during the tenure of the agreement the incremental amount will be paid by M/s UBL for which the Noticee shall proved adequate evidence). • Other taxes and levies as applicable. In additions to above, Power & Fuel costs shall be reimbursed by M/s UBL at the contracted rate of Rs. 12.00 per case calculated on the basis of the annual committed production of 11 lakhs cases. 3. Statement of Rajesh Jain, General Manager of M/s Mohan Goldwater Breweries Ltd., was recorded & he stated that appellant is registered for GTA services only but are not paying any Service tax since 15/12/2008 as all....
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.... part of a building and includes where any land or any building or part of a building together with any machinery, plant, furniture, fittings or other things, such machinery, plant, furniture fitting or other things also. On further perusal of the details of the facility fee received by the appellant from UBL and the agreement signed between them containing the terms and conditions, roles and responsibilities, payment terms, Genral obligations etc., it appeared to revenue that the said services as discussed in the preceding paragraphs provided by the appellant to UBL, are classifiable under renting of immovable property service and are liable to service tax. The fact that expenditure is incurred by the appellant for facilitating UBL is also evident from the balance sheets etc. Expenses were made towards arrangement of supervisors, executives, workers and contractors et cetera employed by the appellant itself to facilitate UBL, is found recorded. It further appeared that appellant have received from UBL an amount of Rs. 4,50,44,197/- towards reimbursement of expenses, received Rs. 295,83,330/- as facility fee from UBL towards provision of facility of manufacturing and bottling of be....
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....clause of section 65(90) of Chapter V of the Finance Act, 1994. It is further argued that even if it is presumed for sake of argument that impugned activities are service subject to service tax under category of "Renting of immovable property service", extended period of limitation is not invokable due to retrospective amendment in the definition of renting of immovable property vide the Finance Act, 2010 with effect from 01/07/2010. Reliance is placed on the ruling of this Tribunal in the case of Jindal Vegetable Products Ltd. Versus Commissioner of Central Excise (2013- TIOL-315 CESTAT-Delhi. The ld. Commissioner have relied on the ruling in the case of Commissioner of Central Excise, Aurangabad Versus Narsinha SSK Ltd. 2015 (38) S.T.R. 165 (Tri. - Mumbai) wherein entire factory was leased out along with plant and machinery which is clearly on different facts, since in appellant's case only manufacturing facilities were let out excluding land and building. Since appellant was engaged in providing operational assistance to UBL which is included as taxable activity under the category of "Support Services of Business or Commerce" with effect from 01/05/2011 as defined in Section 65(....
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....x under "Business Support Service" & (iii) whether longer period of limitation is applicable and penalty imposable. 8. Further States, that perusal of the agreement executed between the appellant and UBL unmistakenly shows that the same has been made for the two identifiable different purposes. First, to provide entire factory including the plant and machinery to UBL by the appellant for manufacture of final products by UBL. This shows that the appellants were engaged in renting/letting out their factory including the plant and machineries to UBL for a consideration during the relevant period. Section 65(90a) of the Finance Act, 1994 gives the statutory definition of "Renting of immovable property" and Section 65 (105) (zzzz) of the Finance Act, 1994 gives the definition of taxable service relating to "Renting of immovable property". A conjoint reading of the said two definitions reveals that renting/letting out of a factory to any person is a taxable service under "Renting of immovable property". Explanation to Section 65(90a) of the Finance Act, 1994 specifically includes use of immovable property as factories for the purpose of the clause "for use in the course of....
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....ere is no Principal-Agent relationship between the appellant and UBL as per the said agreement. So far the ruling of M/s Intercontinental Consultants & Technocrats Pvt. Ltd. (supra) is concerned the same is not applicable in the facts of this case since the amount charged and recovered from UBL towards wages, etc. are not reimbursable expenses of the appellant and there is no applicability of Rule 5(1) of the Service Tax (Determination of Value) Rules, 2006 which was quashed by the Hon'ble High Court of Delhi in the said decision. There is also no application of Rule 5(2) of the said Rule since the appellant is not an agent of UBL as is evident from the agreement executed by the appellant. So far the longer period of limitation is concerned it has been urged that appellant have entered into an agreement with UBL on 15/12/2008. The said agreement unambiguously is an agreement for rent. The appellant never intimated about such agreement nor sought any clarification from the Department in this regard. Appellant was well conversant with the statutory provisions of the Finance Act, 1994, since they suo-moto discontinued payment of service tax on GTA with effect from 15/12/2008 on the ba....
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....t of Rs. 30 lakhs being the consideration agreed against use of infrastructure plant, facility, etc. Such amount is termed as "Conducting Charges" in the books of accounts of KSM. Under such facts and circumstances Hon'ble Bombay High Court held as follows:- "13. In that main order, the Tribunal held that it has gone through the agreement. Under the agreement, the assessee agreed to pay to M/s. KSM an amount of Rs. 30 lacs towards use of infrastructure for manufacture of liquor. As per Clause 2 of the agreement, all profits and losses in respect of the manufacturing and sale of the products in the distillery division are on account of the respondent assessee. The respondent assessee had actually taken over the distillery unit of M/s. KSM. It undertook the manufacturing activity as well as sale of products. There was no evidence on record to show that the assessee had received any amount from M/s. KSM for providing any service in relation to the business. 14. It is in that light and in facts peculiar to the case of the present assessee that the Tribunal concluded that Clause (104c) of the substantive provision, namely, Section 65 will not be attracted and is not applicable. In....