TaxTMI 
TaxTMI 
2025 (11) TMI 944
X X X X Extracts X X X X
X X X X Extracts X X X X
..... The appellant had reimbursed expenses to its foreign group company for their share of the expenses for events/conferences held outside India. Those events were organized to train the employees of the appellant and keep them updated with technological know-how. The associate enterprises charged the said expenses on cost-to-cost basis by way of issuance of invoice to the appellant. Subsequently, the audit of appellant's record was conducted and on the basis of the audit, the department entertained the view that the appellant is liable to pay service tax under 'business support services'. Thereafter, a show cause notice dated 22.12.2016 was issued to the appellant proposing to demand the service tax on the amount paid to its foreign group company. After following the due process, the learned Commissioner, vide the impugned order, dropped the demand of service tax in respect of other issues but confirmed the demand of service tax of Rs.1,81,78,060/- on advertisement, legal and recruitment expenses under the category of 'business support services' for the period till 01.07.2012 and as a 'service' after the negative list regime came into force; interest and penalty were also imposed. H....
X X X X Extracts X X X X
X X X X Extracts X X X X
....) STR 151 (Tri. Mumbai) * Gujarat State Fertilizers & Chemicals Ltd vs. CCE - 2016 (45) STR 489 (SC) * Reliance Ada Group Pvt Ltd vs. CST, Mumbai-IV - 2016 (43) STR 372 (Tri. Mumbai) 4.2 The learned Counsel further submits that the reimbursement made by the appellant to group entities for expenses incurred by them will not be liable to service tax as the same does not fall under the definition of consideration mentioned under explanation to Section 67 of the Act. She also submits that reimbursement made by the appellant cannot be regarded as consideration flowing from the appellant towards the foreign entities, rather the same is towards the reimbursement of cost incurred for organizing the events, hence, such reimbursement is not a consideration in lieu of receiving any services from the associated enterprise. She further submits that though the definition of consideration was amended w.e.f. 14.05.2015 by which reimbursable expenses were included within the ambit of consideration, but the period involved in the present case is prior to the said amendment, therefore the confirmation of demand, by including reimbursable expenses in taxable value, is unsustainabl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....services, the same are in the nature of event management as defined under Section 65(40) of the Act for the period upto 30.06.2012 and the same are taxable under Section 65(105)(zu) of the Act. She also submits that prior to 01.07.2012, Rule 3 of the Taxation of Services (Provided from Outside India and Received in India) Rules, 2006 provided taxability of the performance-based services, which will be decided by the place where the services are actually performed and the event management services are covered under clause (ii) of Rule 3 of the said Rules and therefore, the taxability of such service will be determined by the place where the events take place. She also submits that in the present case, it is not in dispute that the events are organized and performed outside India, therefore, same cannot be subjected to service tax. 4.5 The learned Counsel further submits that the amounts paid by the appellant are merely reimbursements of expenses which are undertaken by the foreign enterprises as a 'pure agent' under Rule 5(2) of the Valuation Rules and therefore, the same are not liable to service tax. 4.6 As regards the legal services, she submits that the amount was received....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of limitation cannot be invoked. For this, she relies on the following cases: * Maruti Suzuki India Ltd vs. Commr of ST, Delhi - 2024 (4) TMI 724 CESTAT Chandigarh * Hoshiarpur Automobiles vs. CCE & ST, Ludhiana - 2024 (4) TMI 432 CESTAT Chandigarh She also submits that the entire situation is revenue neutral as there was no intention to evade tax and therefore, demand confirmed by invoking the extended period is liable to be set aside. For this, she relies on the following cases: * Coforge Smartverse Ltd vs. Commr of ST, Delhi - 2024 (1) TMI 826 CESTAT Chandigarh * Dhanuka Laboratories Ltd vs. Commr of ST, Delhi - 2023 (12) TMI 851 CESTAT Chandigarh * Sun Pharmaceuticals Industries vs. CCE & Cus, Jammu - 2024 (2) TMI 958 CESTAT Chandigarh 4.10 As regards the interest and penalty, the learned Counsel submits that when the demand itself is not sustainable, the question of interest and penalty does not arise. 4.11 She further submits that the amounts deposited by the appellant are liable to be refunded as the impugned order has failed to give any finding for the same. 5. On the other hand, the learned Authorized Representative ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....expenditure has been shared among the group Companies at the ratio agreed in the agreement dated 01-04-2008. We observe that there is no service element involved in this case. Thus, we find that in these circumstances, the demand of service tax under the category of 'Business Support Service' is not sustainable. We find that the issue is no more res integra as the demand of Service Tax on cost sharing is settled by the decision of the Hon'ble Supreme Court in Gujarat State Fertilizers & Chemicals Ltd. v. Commissioner of C. Ex. [2016 (45) S.T.R. 489 (S.C.)], wherein, it has been held that demand of Service Tax on cost sharing is not sustainable. The relevant part of the said decision is reproduced below: "15. We have considered the aforesaid submissions in the light of the material placed on record. We shall advert to the second aspect namely, as to whether the arrangement between GSFC and GACL amounts to providing any services by GSFC to GACL and 50% incineration expenses incurred would constitute charges for providing such services. There is no dispute about the manner in which HCN is received through pipeline from M/s. Reliance Industries Ltd. by GSFC and GACL an....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e decisions cited above, we hold that the demand confirmed in the impugned order under the category of 'Business Support Service' is not sustainable and accordingly, we set aside the same." 8. Further, we find that the even the reimbursement of expenses made by the appellant to its group company by way of reimbursement cannot be considered as a 'consideration' for providing the service. In the instant case, the reimbursement made by the appellant cannot be regarded as consideration flowing from the appellant towards the foreign entities rather the same is towards the reimbursement of cost incurred for organizing the events and therefore, such reimbursement by the appellant is not a consideration in lieu of receiving any service from its associated enterprises. We further find that though the definition of 'consideration' was amended w.e.f. 14.05.2015 by which reimbursable expenses were included within the ambit of consideration, but the period involved in the present case is prior to the said amendment, therefore, the confirmation of demand, by including reimbursable expenses in taxable value, is not sustainable. Same view has also been taken by Mumbai Bench of the Tribu....