TaxTMI 
TaxTMI 
2022 (11) TMI 437
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....L. The Appellants used to raise cost sharing invoices on HPPL. The Appellants also charged applicable service tax under the taxable category of Business Support Services from the invoices raised on or after 01.04.2006 for the costsharing invoices. Thus, during the period 01.04.2005 to 31.03.2008, the Appellants charged the cost sharing expenses of Rs.29,20,64,558/- along with service tax of Rs.2,64,57,777/-. 2.2 However, due to poor financial conditions of HPPL, the Appellants waived off the sum of Rs.29,20,64,558/- along with service tax of Rs.2,64,57,777/- on 31.03.2008. The said waiver was duly approved by the Board of Directors of the Appellants vide resolution dated 18.03.2008. The certified copy of the Board Resolution dated 18.03.2008 is available in appeal paper book on Page No. 35. 2.3 During the course of audit of the Appellants by the Service Tax Authorities, Ahmedabad, it was observed that the Appellants have waived Rs.29,20,64,558/- along with service tax of Rs.2,64,57,777/- on 31.03.2008, however, the Appellants have not paid the service tax. 2.4 The said audit observation culminated in to issuance of show cause notice having number F. No. STC/4-51/O&A/10-11 ....
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....Asian Hotels Ltd. reported in 2019 (9) TMI 670 - CESTAT New Delhi. • Arvind Mills Ltd. 2014 (35) STR 496 (Guj) • Gujarat Sidhee Cement Ltd. Final Order No. A/10701-10704/2019 In view of the above, the Learned Counsel argued that they have not rendered any services to HPPL and therefore, the demand of service tax itself is not sustainable. 2.9 Learned Counsel argued that the revenue authorities have failed to make out any case against the Appellants for demanding the service tax under the taxable category of business support services. The show cause notice did not allege that the said services are business support services. However, Ld. Commissioner still confirmed the service tax under business support services. The entire proceedings are in violation of principles of natural justice. 2.10 Learned Counsel for the Appellants submit that the show cause notice dated 18.10.2010 never alleged that the Appellants have rendered the services in the nature of business support services to M/s. HPPL and it does not refer to the statutory definition of business support services. For classification of services, the show cause notice dated 18.10.2010 merely rel....
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.....14 Learned Counsel for the Appellants further submit that the same proposition has been laid down in following cases: • McDonalds India Pvt. Ltd. 2018 (8) GSTL 25 (Delhi) • Nortel Networks (I) Pvt. Ltd. 2017 (52) STR 489 (Tri.-Del) • Sify Technologies Ltd. 2015 (39) STR 261 • GECAS Services India Pvt. Ltd. 2014 (36) STR 556 (Tri.-Del) On the basis of the above, the Appellants submit that the reasoning given by Ld. Commissioner to hold that the Appellants were liable to pay service tax for the period prior to 10.05.2008 is erroneous and on this ground itself the appeal filed by the Appellants be allowed by setting aside the impugned order in original. 2.15 Learned Counsel argued that during the period in dispute, Rule 6 of the Service Tax Rules, 1994 dealing with payment of service tax prescribed that the payment of Service tax has to be made when the consideration for the said services is received. 2.16 In the present case it is undisputed fact that the Appellants have never receivedany consideration for alleged services during the period in dispute. Therefore, the Appellants are not liable for payment of service tax at ....
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.... parties, settlement in the books of account is done and net payable amount is arrived at and that is paid. The Appellants rely on the case of CIT Vs. Nainital Bank Ltd. 1966 (62) ITR 638 (SC) and decision in case of J B Boda& Co. Vs. CBDT 1996 (89) Taxmann 311 (SC). 2.22 Learned Counsel for the Appellants further argued that the entire demand of service tax is time barred in the present case. The show cause notice dated 18.10.2010 has been issued to the Appellants to demand the service tax for the period 01.04.2005 to 31.03.2008.The demand under Section 73 would have been limited to one year from the relevant date i.e. from the date of the show cause notice i.e. 18.10.2010.However, it is alleged that the Appellants have suppressed the material information from the revenue department and therefore, the show cause notice has invoked the extended period of limitation of 5 years. 2.23 Learned Counsel submit that the extended period of limitation is not sustainable in the present case for the reason that the Appellants have not suppressed anything from the revenue department. The transaction of waiving off of the balance pertaining to HPPL was recorded in the books of account and....
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....Consequently they wrote off the said amount in their books of accounts on 31.03.2008. 4.2 Prior to 10.05.2008, the explanation C to Section 67 read as under: "gross amount charged' includes payment by cheque, credit card, deduction from account and any form of payment by issue of credit notes or debits notes and book adjustment." With effect from 10.05.2008, the said explanation C was substituted with the following explanation: "gross amount charged' includes payment by cheque, credit card, deduction from account and any form of payment by issue of credit notes or debits notes and book adjustment, and any amount credited, as the case may be, to any account, whether called "suspense account" or by any other name, in the books of account of a person liable to pay service tax, where the transaction of taxable service is with any associated enterprise". 4.3 The appellants have contended that they have not provided any services to their associated company. The arrangement between them and the associated company was in the nature of cost sharing they relied on the decision of Hon'ble Apex Court in case of Gujarat State Fertilizers & Chemicals Ltd Vs CCE 2016 (4....
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....x does not arise. In view thereof, it is not necessary to go into the question as to whether receiving of HCN through the said common pipeline in the tank which is setup by the GFSC and GACL amounts to 'storage' or not and we leave the said question open. 17. For the aforesaid reasons, the demand of 'service tax made by the respondent is unwarranted and is hereby set aside. We, thus, allow these appeals thereby quashing the Adjudicating Authority's order as well as the order of the CESTAT." In the light of the above observation of Hon'ble Apex Court, it is seen that the arrangement of the appellant with it is associate companies is in the nature of cost sharing and it would not be correct to say that the appellants are providing any services to their associate companies. In this regard the observations of Tribunal in the case of Reliance Ada Group Pvt Ltd Vs CST- 2016 (43) STR 372 (T) also became relevant: "5.5 It is therefore clear that common services are not 'provided' by the appellant but, only these are only 'procured' by the appellant from the Service Providers. Costs thereof are shared by the recipient Participating Group ....
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....tion, whereas the Appellant at best acts as an agency to procure services and allocate cost to various Participating Group Companies for which it can claim an amount of Rs One Crore jointly from all participating group companies as its fees in addition to the reimbursement of the total costs incurred Towards such common services. 5.9 No direct statutory provision or any binding precedent could be shown to us by the Revenue, which for the relevant time, covers the activity of incurring costs and seeking reimbursements as Pure Agent under the purview of the "Business Support Services" under Clause (105) of Section 65 of the Finance Act, 1994 as amended by Finance Act, 2006 There is no dispute on the fact that no additional fees or profits or consideration for Pure Agent services is received by the appellant, who has merely recovered actual costs incurred from the Participating Group Companies. 5.10 We find that the definition of 'Business Support Services' covers only specific activities in its inclusive part of the definition. Only if such specific activities are carried out, it would be classifiable as Business Support Services The Appellant per se in its ....