TaxTMI 
TaxTMI 
2025 (6) TMI 183
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....nit registered as 100% EOU at Pune, Maharashtra, which primarily engaged in R&D activities. Each of the unit has separately been registered with the Service Tax Department and complied with the procedures as prescribed under the Finance Act, 1994 read with Service Tax Rules. On the basis of audit at Bangalore unit, it came to the notice of the Department that during the period October 2012 to March 2015, the appellant (i) have not paid service tax on TDS of Rs.88,087/-; (ii) availed irregular cenvat credit of Rs.2,17,92,402/-; (iii) failed to discharge service tax of Rs.3,59,935/- on advances received from customers; (iv) failed to pay service tax of Rs.8,42,53,255/- on services provided to their Pune Division and (v) wrong adjustment of service tax liability against bad debts written off in 2013-14 & 2014-15 amounting to Rs.45,88,500/-. Consequently, a show-cause notice was issued on 29.06.2016 for recovery of the said amounts with interest and penalty. On adjudication, the demands have been confirmed with interest and penalty. Hence, the present appeal. 3.1. At the outset, the learned Chartered Accountant for the appellant has submitted that they have discharged service tax on T....
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....rded in the said General Ledger is mere book entries/ adjustment for costing /profitability purpose and there cannot be any service for self. Further, he has submitted that there cannot be service tax liability on the services provided to oneself as service tax gets attracted only when there is a service provider and service receiver to any service. In the present case, service provider and service receiver are the units of the same entity; hence cannot be considered as separate persons. Service to self cannot be leviable to service tax as held by the Hon'ble Supreme Court in the case of State of West Bengal Vs. Calcutta Club Limited [2019(29) GSTL 545 (SC)]. Further, he has submitted that the book adjustments will get eliminated when consolidated balance sheet of the company is prepared; hence, it is clear that the entries are merely book adjustment and there are no real transactions existed and there cannot be any service to self. In support, they have also referred to the judgment in the following cases:- i. Precot Mills Ltd. Vs. Commissioner [2006(2) STR 495 (Tri.)] ii. Indian Oil Corporation Ltd. Vs. Commissioner [2007(8) STR 527 (Tri.)] iii. Chemplast Sanmar Ltd. Vs. CC....
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....usInd Bank Limited, the learned Commissioner denied the said credit on the ground that the proceeds of short-term loans and NCDs were not used for the purpose of R&D activities by the unit at Bangalore since they do not carry any R&D activity at Bangalore. In other words, services have not been used at Bangalore but used at their Pune unit. Rebutting the said argument, the appellant has submitted that Bangalore unit also undertakes R&D activities relating to contractual obligations and Pune unit undertakes R&D activity on drug discovery. The loan raised by the appellant relating to the activity of finance of the company and it cannot be assigned either to Pune or Bangalore unit; hence the credit is admissible. We find merit in the contention of the learned Chartered Accountant for the appellant inasmuch as M/s. IndusInd Bank Limited had invested a sum of Rs.205 crores in NCDs and also the appellant had availed three short-term loans of Rs.15.00 crores each and one short-term loan of Rs.10.00 crores for their temporary cash flow requirements. The said fund had been utilised by both the Bangalore as well as Pune units in their R&D activities; therefore, the finance services cannot be....
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....2011, I find that the noticee were required to pay service tax on accrual basis and the credit notes were required to be issued and adjustments made only if the services had not been rendered by them. In the instant case, the noticee have rendered the services and the reason for issuing credit notes was non-receipt of payments from their customers. Since the credit notes were issued for non receipt of payments, it is evident that the noticee had rendered the services to their customers. In view of this legal position, I find that the noticee were ineligible to avail the benefit of Rule 6(3)(b) of the Service Tax Rules 1994. There is no doubt that the benefit of the said Rule is available only in cases where a person has not provided any services. 30.4. With regard to the cases where credit notes were issued due to cancellation of study, on verification of the related invoices, it is seen that these invoices were raised consequent to the submission of study plan and draft report by the noticee. This fact establishes that the noticee had rendered the services partially, whereas the noticee had issued credit notes for the whole amount mentioned in the said invoices. In view of these....