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2019 (11) TMI 386 - CESTAT NEW DELHIClassification of services - Business Support services or not - Amounts received from the subsidiary companies for providing expert manpower to them for discharging certain functions - Establishment Expenses - Administrative Expenses - sharing of expenses - Department entertained a view that the reimbursement of the Administrative and other expenses received by the Appellant from the subsidiary companies is covered under the category of ‘Business Support Services’. HELD THAT:- It is a matter of record that the appellant had been deputing certain employees to the subsidiary companies namely, M/s. REC Power Distribution Co.Ltd. and M/s. REC Transmission Power Co. Ltd. It is found from the record of the appeal that there has been reimbursement of the expenses incurred by the Appellant towards its employees been working with the two subsidiary companies of the appellant on a deputation basis. The recovery of administrative and establishment expenditures has been recorded under books of accounts under the head of ‘Establishment Expenses’ and ‘Administrative Expenses’. It can be seen from the above definition that ‘Business Support Service’ covers certain specific activities in its inclusive definition. Only if such specific activities are carried out by a Service provider, it would be classifiable under ‘Business Support Service’. From a perusal of the activity undertaken by the Appellant, it is seen that the Appellant had only sent certain number of employees to its subsidiary companies on cost recovery basis. It would not be covered by any activity contemplated in the definition of ‘Business Support Service’. Payment of certain amount towards establishment and administrative expenditure for providing certain employees to the subsidiary companies is in the nature of sharing of expenses between two companies and would not fall under any category of taxable service. The logic given by the adjudicating authority in the above mentioned paragraphs justifying the classification of the activity under the ‘Business Support Service’ is not legally tenable as providing expert man power on cost recovery basis does not fall under any of the inclusive category of ‘Business Support Service’. Since the Show cause notice issued has demanded Service Tax under the category of ‘Business Support Service’ and the CBEC has already clarified that such an activity is classifiable under ‘Manpower Recruitment or Supply Agency’ service as provided under Section 65(105)(k) of the Act, the demand of Service Tax, is not sustainable and, deserves to be set aside. Time limitation - HELD THAT:- Since the demand itself is not sustainable on merits, we refrain from discussing the other aspects like demand being time barred. Appeal allowed - decided in favor of appellant.
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