TaxTMI 
TaxTMI 
2024 (12) TMI 1755
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....rvice tax department. The appellant paid Global Account Manager (GAM) expenses to the holding company towards its share of expenses on the employees of the holding company or any of its-other-subsidiaries-who took care of particular global customers, having operations in other countries and whose logistics requirements are being managed by the appellant. The appellant had also paid certain amount towards sharing of expenses on leased circuits provided by foreign service providers between the headquarters of the holding company and other cities around the globe. A show cause notice dated 21.04.2009 was issued to the appellant wherein service tax was demanded on Global Account Manager (GAM) expenses for the period 01.10.2003 to 31.03.2008 under the category of 'Business Auxiliary Service'. Subsequently, the appellant received another show cause notice dated 16.10.2009 wherein service tax demanded for being recipient of service for the period 01.04.2008 to 30.06.2009 under the category of 'Business Auxiliary Service' and leased line charges, relying upon the earlier show cause notice dated 21.04.2009. The same were adjudicated and the demand of service tax was confirmed along with imp....
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.... his submission, he relied upon the decision of Tribunal Mumbai in the case of TCS E-Serve Ltd. vs. Commissioner of Service Tax, Mumbai [2014 (33) STR 641 (Tri.-Mumbai)]On the issue of Service Tax on Royalty basis, the learned counsel relied upon the decision in the case of Castrol Limited vs. Commissioner of Central Excise, Raigad [2007 (8) STR 254 (Tri.-Mumbai)] in support of his contentions. 3.3 Learned Counsel further submitted that this was purely a cost sharing arrangement for mutual benefit of the companies participating in the common facility. There is community of interest, wherein each participant undertakes to pay the cost of the facility relatable. The process does not involve any transaction between a service provider and recipient of its service. In support of his submission, he relied upon the following decisions: - ● Gujarat State Fertilizers and Chemicals Limited vs. Commissioner of Central Excise [2016 (45) STR 489 (S.C.)] ● M/s Historic Resort Hotels Private Limited vs. CCE, Jaipur-I [2017 - TIOL-3660-CESTAT DEL.] ● Reliance ADA Group Pvt. Ltd. vs. Commissioner of Service Tax, Mumbai-IV [2016 (43) STR 372 (Tri.-Mumb....
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...., but also their services to facilitates the rendering of services to the clients. 4.1 Learned Authorized Representative further submitted that the services in question are 'Business Auxiliary Service' referred to in subclause (zzb) and 'Business Auxiliary Service' referred to in sub-clause (zzzq) and are, thus, covered in clause (iii) of the Rule 3 of Taxation of Service (Provided from outside and received in India) Rules, 2006. The said services have been received by the appellant for use in business or commerce and therefore, the said services are provided from outside India and received in India. The place of performance has no relevance. 4.2 Learned AR further contended that the appellant has never disclosed the facts to the Department, these facts came to the notice of the Department only on the basis of specific information. The appellant did not assess the correct amount of service tax and have also not shown the actual amount in the relevant ST-3 returns, thus violated the provisions of section 70 of the Act. They have wilfully suppressed the facts from the Department with intention to evade the payment of service tax. Therefore, extended period and penalty under Sec....
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....for, or on behalf of the client; or (vi) provision of service on behalf of the client; or (vii) a service incidental or auxiliary to any activity specified in sub-clauses (i) to (vi), such as billing, issue or collection or recovery of cheques, payments, maintenance of accounts and remittance, inventory management, evaluation or development of prospective customer or vendor, public relation services, management or supervision, and includes services as a commission agent, but does not include any activity that amounts to "manufacture" of excisable goods. Explanation - For the removal of doubts, it is hereby declared that for the purposes of this clause, - (a) "Commission Agent" means any person who acts on behalf of another person and causes sale or purchase of goods, or provision or receipt of services, for a consideration, and includes any person who, while acting on behalf of another person - (i) deals with goods or services or documents of title to such goods or services; or (ii) collects payment of sale price of such goods or services; or (iii) guarantees for collection or payment for such goods or services; or (iv)....
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....ct from 01.05.2011. Hence, demand under the category of "Business Auxiliary Service" is not sustainable. In this context, we note that the functions of the Global Accounts Manager was to maintain communications between their clients and the Corporate Headquarter of the holding company. Vital information about the customers and freight movements organised by the appellant are passed on to their clients by these Global Account Managers. In view of the nature of the work of the said Global Account Managers, we are of the view that the said task is more appropriately classifiable under Business Support Services, which clearly covers the nature of the services being provided by the Global Accounts Managers. We find that the Show Cause Notice has proposed to classify services received by the appellant under 'Business Auxiliary Service', which according to our opinion does not cover the nature of the activity undertaken by the appellant. We observe that a specific description is to be preferred over general description for classifying a service as per Section 65A(2)(a). Accordingly, we concur with the Ld Counsel's submissions that the said service is appropriately classifiable under the c....
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....t. Consequently, as there is a specific classification for the said service, we hold that this service is not taxable under this category as it has not been provided by "Telegraph Authority". We observe that the Ld Counsel has relied upon the decision of Tribunal Mumbai in the case of TCS E-Serve Ltd. vs. Commissioner of Service Tax, Mumbai 2014 (33) STR 641 (TRI.), wherein this Hon'ble Tribunal has held that International leased circuit service from the foreign vendor was not taxable being telecommunication service from a person other than the telegraph authority. It has also been submitted before us that the demand on this account has been dropped for the subsequent period vide Order-in-Original dated 28.08.2012, we hold that the demand for the previous period cannot be sustained. 9. We take up the demand of Service Tax on royalty. It has been submitted by the Ld Counsel that this was merely supply of know-how which has been held as not taxable under management consultancy service. He relied on Castrol Limited vs. CCE, 2007 (8) STR 254 (Tri.) decision wherein the Tribunal has held that transaction for supply of know-how is not taxable as management consultant service. We concu....
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.... nonexclusive technical know-how the consideration received cannot be taxed under consultancy service. Reference can be made to the decisions in Yamaha Motors (I) Pvt. Ltd. v. CCE, Delhi-IV (Faridabad) reported in 2006 (3) S.T.R. 665 (Tri. - Del.) = 2005 (186) E.L.T. 161 (Tri.), CCE &Cus. Nashik v. Larsen & Toubro Ltd. reported in 2015 (37) S.T.R. 156 (Tri. - Mumbai), CST, Mumbai v. Leibert Corporation reported in 2014 (33) S.T.R. 161 (Tri. - Mumbai) and CST, Delhi v. Suzuki Motor Corporation reported in 2012 (25) S.T.R. 266 (Tri. - Del.). 6. We find that the facts of the above case are identical to the impugned case before us excepting the fact that the case above, service tax was demanded on Reverse Charge Mechanism, in the impugned case before us, the charge is on Forward Basis. We also find that Tribunal in the case of Supreme Industries Ltd. (supra) held that consideration received towards the transfer of technical knowhow cannot be held to be consideration for the services rendered as Consulting Engineer. In view of the same, we find that the impugned order passed in revision is not sustainable and is liable to be set aside". 10. As regards the issue rela....
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....dated 06.07.1980. Once these facts are accepted, we find that handling portion and maintenance including incineration facilities is in the nature of joint venture between two of them and the parties have simply agreed to share the expenditure. The payment which is made by GACL to GSFC is the share of GACL which is payable to GSFC. By no stretch of imagination, it can be treated as common 'service' provided by GSFC to GACL for which it is charging GACL." 11. We now address the submissions with regard to the demand of service tax under the head 'Others' in the books of account paid by it to its holding company for "software license access and maintenance expenses" to its holding company was taxable under the category of "Online Information and Data Base Access or Retrieval Services". We note that the impugned order has confirmed the demand on the grounds that the appellant had failed to produce the details of such payments. It has been submitted by the Ld Counsel that the payment towards software license cannot be equated with "Online Information and Data Base Access and Retrieval Services". We concur with this submission. However, we also take note that the demand has bee....