2023 (5) TMI 523

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....passed by the Commissioner. The appellant has filed the Service Tax Appeal No. 50477 of 2021 challenging the demand of Rs. 46,67,212/- confirmed along with interest and equal penalty. The department has filed the Service Tax Appeal No. 50379 of 2021 challenging the dropping of the service tax demand of Rs.1,68,14,783/- by the adjudicating authority. 2. The Appellant, having its registered office at 3rd Floor, DLF Centre, Sansad Marg, Delhi, had entered into an agreement with its holding company, namely The Boeing Company ["TBC"] for providing services on a cost plus mark-up basis. In order to provide service effectively and efficiently, the Appellant employed employees of TBC on secondment basis. The Appellant entered into a salary reimb....

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....ed on details provided by the Appellant and thereafter a debit note was issued on the Appellant. 5. The counsel stated that in terms of the employment letter issued to the secondees, the Appellant was arranging facilities like providing accommodation, hotel stay, car and education (school tuition fees) of dependent children of the seconded employees. The expenses for the same were incurred by the Appellant directly, except for school tuition fee where payment was made by the seconded employees and then reimbursement was claimed. He added that an employer-employee relationship came into existence between the Appellant and the seconded employees and such arrangement will not fall under the definition of 'service' under Section 65B(....

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.... the service provider and the same should be charged to the service recipient. Therefore, in the facts and circumstances of the case, we find that the expenses incurred by the appellants are not goes required to be included in terms of the explanation under Section 67D. Therefore, we find that demands confirmed on the various expenses incurred by the appellants are not sustainable. Accordingly, they need to be set aside. When the demands are liable to set aside various penalty imposed are also not sustainable". (ii) Telenor Consult AS vs. Delhi-I [2019 (2) TMI 955 - CESTAT NEW DELHI], wherein on the similar facts, the Hon'ble Tribunal has held that service tax will not be applicable on the benefit provided by the service recipient ....

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.... the Adjudicating Authority, had failed to appreciate that as per Section 67(4)(c) of the Act 'gross amount charged' will include any form of payment, including credit note, debit note, book adjustment to any account by the person liable to pay service tax. The service tax paid by the appellant to the venders providing the said services is a different transaction which is not related to the service being received by the appellant from the parent company. He added that section 67(1) (i) of the Act specifically provides inclusion of such value of non-monetary consideration in taxable value. 11. We have heard the learned counsel for the appellants and the authorised representative. The issue of payment of service tax on secondment h....

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....uid pro quo for the service can be brought to charge. Sub-section (4) of Section 67 which enables the determination of the value of the taxable service "in such manner as may be prescribed" is expressly made subject to the provisions of sub-section (1). The thread which runs through Sections 66, 67 and Section 94, which empowers the Central Government to make rules for carrying out the provisions of Chapter V of the Act is manifest, in the sense that only the service actually provided by the service provider can be valued and assessed to service tax. We are, therefore, undoubtedly of the opinion that Rule 5(1) of the Rules runs counter and is repugnant to Sections 66 and 67 of the Act and to that extent it is ultra vires. It purports to tax....