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No Service tax on sharing of resources and cost/ expenses with the Group Companies

Service Tax - By: - Bimal jain - Dated:- 30-3-2016 Last Replied Date:- 6-4-2016 - Dear Professional Colleague, No Service tax on sharing of resources and cost/ expenses with the Group Companies We are sharing with you an important judgement of the Hon ble CESTAT of Mumbai in the case of Reliance ADA Group Pvt. Ltd. Vs. Commissioner of Service Tax, Mumbai-IV [2016 (3) TMI (810) - CESTAT MUMBAI] on the following issue: Issue: Whether the assessee acting merely as a trustee to incur the expenses on .....

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incurred by the Appellant in procuring the services on behalf of the Group Companies would separately be charged to and reimbursed by the Group Companies. Revenue s contention: The services rendered by the Appellant to the Group Companies is classifiable under Business Support Services as defined under Section 65(105) (zzzq) of the Finance Act, 1994 ( the Finance Act ). Further, the Appellant has failed to satisfy the condition no. (iii) and (iv) of Rule 5(2) of the Service Tax (Determination of .....

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expenses incurred from the Group Companies and not receiving any fee, which would alone be liable to Service tax, if charged or received. Thus, in respect of the procurement of services, the Appellant has acted only in the capacity of pure agent' and will not be covered under Business Support Services . Being aggrieved, the Appellant preferred an appeal before the Hon ble CESTAT, Mumbai. Held: The Hon ble CESTAT, Mumbai held that reimbursement of the cost of obtaining and employing resource .....

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ess Support Services . In this regard, the Hon ble CESTAT also relied upon the various Circulars issued by the CBEC i.e. Circular under F. No. B 43/1/97/dated June 6, 1997, etc. and the following judicial pronouncements wherein it was held that reimbursement of expenses so recovered by the assessee is not leviable to Service tax: JM Financial Services Pvt Ltd. Vs. Commissioner of Services Tax [ 2013 (7) TMI 151 - CESTAT MUMBAI]; Tata Technologies Limited Vs. CCE, Pune [ 2007 (5) TMI 110 - CESTAT .....

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