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2019 (3) TMI 875 - AT - Service TaxValuation - reimbursement of expenditure - Classification of services - Support Services of Business and Commerce or not - establishment of a subsidiary - period May 2006 to March 2011 - Held that:- While the reimbursements given by service recipient to service provider which are in the nature of expenses made by the service provider in the capacity of pure agent which are not includable in the assessable value in terms of decision of Hon'ble Supreme Court in the case of Intercontinental Consultants and Technocrats Pvt. Ltd. [2018 (3) TMI 357 - SUPREME COURT OF INDIA]. However, what constitute reimbursements has been decided by larger bench of Tribunal in the case of Bhagwathy Traders v/s C.C.E. [2011 (8) TMI 430 - CESTAT, BANGALORE]. The managing director as well as the employees are all employed by the service provider and are not employees of the service recipient. Thus, in no way does the liability to pay salaries of these people is of the subsidiary. The liability to pay salaries and emoluments to these persons is of the appellant. And, thus, the appellant cannot claim that the amounts received from the subsidiary are in the nature of reimbursements - The building belongs to the appellant and, therefore, the payment of rent, rates and taxes, labour charges, repair and maintenance, generator expenses and insurance premium are all liabilities of the appellant and not of the subsidiary. Thus, these payments are not in the nature of reimbursements. Amounts received of electricity and telephone - Held that:- No tax can be demanded on the amounts of money paid by the subsidiary on count of electricity and telephone consumed on estimate basis. Similarly, for the activities done by the President, Executive Director and other Directors and employees on account of the subsidiary and payments made by the subsidiary to the appellant as a reimbursement of the travelling and other expenses would be in the nature of agencies function and excludable from the value of services. The matter is remanded to Original Authority for requantification.
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