2022 (11) TMI 437 - AT - Service Tax
Levy of service tax - Cost sharing agreement - services provided to associated company or not - business support services or not - SCN did not allege that the said services are business support services, however, Ld. Commissioner still confirmed the service tax under business support services - violation of principles of natural justice - HELD THAT:- The arrangement between them and the associated company was in the nature of cost sharing.
In the light of the observation of Hon’ble Apex Court in M/S GUJARAT STATE FERTILIZERS & CHEMICALS LTD. & ANOTHER VERSUS COMMISSIONER OF CENTRAL EXCISE [2016 (12) TMI 103 - SUPREME COURT], it is seen that the arrangement of the appellant with it is associate companies is in the nature of cost sharing and it would not be correct to say that the appellants are providing any services to their associate companies.
The revenue has not been able to identify any specific service, which the appellant has provided to its associate companies. In these circumstances, it is not found that the activities in the nature of sharing cost between associate companies amount to provision of any service by one company in the agreement with to any other companies in the said cost sharing agreement.
However, since the activities under taken under the cost sharing agreement do not amount to provision of Service in terms of the decision of Hon’ble Apex Court in case of Gujarat State Fertilizers & Chemicals Ltd., the demand of Service Tax on the activities under taken under the cost sharing agreement cannot be sustained.