TaxTMI 
TaxTMI 
2019 (3) TMI 875
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....1999, the appellants were required to establish a subsidiary/company, 100% owned by the appellant to enable the member to trade on larger stock exchange like NSE/BSE/CSE/DSE or any other exchange. Consequently, the appellant established a subsidiary. The appellant had a building, infrastructure and the staff and they were already doing functions which were to be transferred to the newly established subsidiary. The subsidiary was established in the same premises and the infrastructure and some of the staff available with the appellant was given to the subsidiary on chargeable basis. The subsidiary was paying certain compensations for the infrastructure and the staff to the appellant. Revenue has sought to demand Service Tax on these amounts ....
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....yee of listing section. iii) One employee of investor service section. iv) One stenographer. v) One employee of accounts - finance section and vi) One peon. The above understanding has been based on the facts that in absence of any major activities in Saurashtra Kutch Stock Exchange Ltd., the minimum requirement of staff for Saurashtra Kutch Stock Exchange Ltd. will be only to the above extent. 2. It has been agreed between parties, that the expenses in the nature of Rent, Rates and Taxes, labour charges for up keeping of building, repairs and maintenance, generator expenses and insurance premium should be reimbursed to the extent of 70% of total expenses by SKSE Securities Ltd. to Saurashtra Kutch ....
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....m the subsidiary to the appellant and, thus, in terms of decision of Hon‟ble Apex Court in the case of Intercontinental Consultants and Technocrats Pvt. Ltd. 2018 (10) GSTL 401 (S.C.). No tax can be levied on the said amounts being in the nature of reimbursements/sharing of costs. 3. Ld. AR relies on the impugned order. 4.1 While the reimbursements given by service recipient to service provider which are in the nature of expenses made by the service provider in the capacity of pure agent which are not includable in the assessable value in terms of decision of Hon‟ble Supreme Court in the case of Intercontinental Consultants and Technocrats Pvt. Ltd. (supra). However, what constitute reimbursements has been decided by large....
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....tion of his collecting the cost of raw materials as reimbursement does not arise. The concept of reimbursement will arise only when the person actually paying was under no obligation to pay the amount and he pays the amount on behalf of the buyer of the goods and recovers the said amount from the buyer of the goods. 6.2 Similar is the situation in the transaction between a service provider and the service recipient. Only when the service recipient has an obligation legal or contractual to pay certain amount to any third party and the said amount is paid by the service provider on behalf of the service recipient, the question of reimbursing the expenses incurred on behalf of the recipient shall arise. For example, when rent for premises i....
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....vider that they can render such services in vacuum. What are costs for inputs services and inputs used in rendering services cannot be treated as reimbursable costs. There is no justification or legal authority to artificially split the cost towards providing services partly as cost of services and the rest as reimbursable expenses." 4.2 The impugned order identified the three issues as follows: "(1) Whether the appellants are required to pay service tax under the category of "Support Services of Business or Commerce" for providing usage of the infrastructural facilities i.e., building, equipments, furniture and fixtures, computers and manpower to M/s. SKSESL or otherwise. (2) Whether the appellants are required to pay service tax ....