TaxTMI 
TaxTMI 
2026 (5) TMI 753
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....s April 2009 to March 2011, and the show cause notice (SCN) was issued on 20.01.2012. The confirmed demand of service tax is Rs. 41,75,181/- along with interest and penalties were also imposed under the relevant provisions of the Finance Act, 1994. 2. The issue involved is whether service tax is payable on 'maintenance or repair' services provided to inter-division units /sister units of the Appellant. 3. The brief facts are M/s. Hindustan Aeronautics Limited, Engine Division ('HAL-ED'), the Appellant is engaged in manufacture of engines for aircrafts. HAL-ED also undertakes repair and overhaul of engines operated by Indian Air Force, Indian Navy, Indian Army, Coast Guard, Border Security Force, Corporate sector, State....
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.... each division of HAL is registered separately with service tax department for payment of service tax. HAL-ED as provider of services needs to discharge the tax liability on such transactions with sister units, as per Rule 6(3) of Service Tax Rules, 1994. A show cause notice (SCN) dated 21.03.2012 was issued and the break-up of demand for 2009-10 is Rs.35,79,221/- and for 2010-11 is Rs.5,95,960/-. On adjudication vide Order-in-Original No. 142/2012 dated 24.12.2012 the demands were confirmed along with interest, and penalty was imposed under sections 73, 75 and 78 of the Finance Act, 1994, respectively. Aggrieved, by this order the appellant filed an appeal before Commissioner (Appeals), who in turn rejected the appeal and upheld the order ....
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.... they were liable to pay Service Tax under the provisions of Section 66A of the Act in respect of the various amounts received for the 'maintenance and repair' services rendered to other units of HAL by them for the services rendered, considering them as associated companies under Income Tax Act, 1961. In view of suppression of facts and with an intent to evade the payment of Service Tax, extended period of five years, is invokable; Penalty under Section 76, Section 77 and Section 78 is leviable; in Order-in-Appeal No. 280/2014 dated 28 March 2014 Appellant have declared certain income under the head "transferred to inter-divisional units"; Appellant has provided maintenance or repair services to inter-divisional units /sister units....
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....s of the same entity cannot be said to be associated enterprises in as much as services provided by one branch to another is to be considered as services provided to self and cannot be subjected to service tax. Reliance placed on the definition of associated enterprise from Income Tax Act is misinterpreted in the show cause notice (SCN). The Appellant submits that it is a general practice followed by companies for determining the costs and profits of its various lines of business or sub-business units, separate accounts are maintained. Reliance is placed on the following cases; a. Precot Mills Ltd. Vs. CCE 2006 (2) STR 495 (Tri.-Bang.), b. Executive Engineer, C/o BSNL Vs. CCE & ST, Jaipur 2019 (25) GSTRL 110 (Tri.-Del.), ....
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.... issue in the present appeal is with regard to the demand of service tax on the services provided by the appellant HAL-ED, the engine Division of HAL to the other Divisions within the same organization. It was held by the Respondent that the services provided by the appellant to their sister Divisions are leviable to service tax for the reason that each division of HAL is registered under the service tax and that they are discharging service tax liability on the output services provided by them. It is the contention of the department that since the appellant being one of the Divisions of HAL is providing services to their sister divisions therefore there are two separate entities and therefore there is a service provider and service receive....