TMI Blog2016 (4) TMI 496X X X X Extracts X X X X X X X X Extracts X X X X ..... C.J. MATHEW, MEMBER (TECHNICAL) For the Petitioner : Shri O.P. Khanduja, Advocate For the Respondent : Ms P. Vinitha Sekher, Deputy Commissioner (AR) ORDER PER: M.V. RAVINDRAN This appeal is directed against Order-in-Original No. 62/STC-I/SKS/11-12 dated 29/02/2012. 2. The issue in brief is appellant is manufacturer of pharmaceutical products and having their own marketing network. They have three related companies which are group companies, were also manufacturers of pharmaceutical products but they do not have any marketing network, hence for selling the product they used the network of the appellant. Appellant for use of such marketing network, recovers the expenses incurred by them from these three group companies in form of percentage of the value of sale made by these three companies and the same is recorded in writing by an agreement dated 8 November, 1982. It is the case of the revenue that the recovery of such expenses is in the nature of services rendered under the category of Business Auxiliary Services (promotion or marketing or sale of goods produced are belonging to the client). A show cause notice was issued for demand of the service tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s is very clear from the agreement dated 8 November, 1982. She would submit that this bench in the case of Forbes Polymerton Pvt. Ltd. 2015-TIOL-2595-CESTAT-Mum, specifically held that such an activity of deputing various individuals to the group companies is covered under the services tax liability under Business Support Services or Management Consultancy Services . She would submit that the same is the view expressed by the bench in the case of Artefact Infractructure Ltd. 2016-TIOL-31-CESTAT-Mum. It is her submission that the claim of limitation as raised by the learned advocate will be on no consequence as the appellant had not informed the department regarding the services rendered by them and receipt of consideration from the other three companies. 5. We heard both sides and perused the records. 6. On perusal of records, we find that the issue involved in this case is regarding the taxability of the services rendered by the appellant. It is the case of the revenue that such services would fall under the category of Business Auxiliary Services while the appellant is resisting the same. 6.1. Undisputed facts are appellant is manufacturer of pharmaceutical products ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... up companies are governed by the rules, terms and conditions applicable to that group company; that the goods which are manufactured by the group companies and sold by the deputed employees has to be considered as the sale of that group companies and any complaint regarding the said product has to be addressed and solved by that group companies and not by appellant. The reading of the contract indicates that appellant is only deputing the employees to the group companies and said employees are called back after the job is completed and utilized in the activity of the appellant or deputed to any other group company. We find that claim revenue that such activity would fall under the Business Auxiliary Services, has no lows-standing as agreement does not indicate that the appellant is rendering services of promotion or marketing of the goods manufactured by the group companies. 6.4. We find that similar issue cropped up before the bench in the case of K.Raheja Real Estate Services Pvt. Ltd. (supra) therein the bench after considering the entire issue held as under. 6. We have carefully considered the submissions and perused the record. Undisputedly the appellant stated payin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be set aside and we do so. 7. We can reach the same conclusion by viewing this matter from a different perspective. By legislative design, services rendered in the course of employment have been kept outside the purview of service tax levy. This is true not only for the period under consideration but even at present under the new Negative List Regime of taxation post-2002. Whether such service are rendered by an employee to one employer or to many, as in the case of joint employment, cannot make any difference to the tax treatment of the emoluments earned by the employee. We find support for this conclusion from a Draft Circular of the Board dated 27.7.2012 which deals with the cases of joint employment . Though a final Circular does not seem to have been issued till date, we find ourselves in total agreement with the reasons given in this Draft Circular, whose paras 5 and 6 read thus: Joint Employment 5. There can also be cases where staff is employed by one or more employers who normally share the cost of such employment. The services provided by such employee will be covered by the exclusion provided in the definition of service. However, if the staff h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... collective conduct of the employees and the employer-companies for long period of time has the effect of establishing that the contract of employment is one of the joint employment. 7.2. Even otherwise, by its very nature, a situation where employer-companies have a preexisting agreement to hire employees on joint basis and agree to share the cost of employment on actual by dividing it amongst themselves in such a manner that each employer bears only his part of the cost indicates that there was no intention amongst the employer-companies to render any service to each other. It indeed the intention of the parties would have been otherwise, the employer-company which takes the trouble of hiring an employee in its own rolls would have insisted on some mark-up or margin being given to it, over and above the actual cost. In the absence of such a mark-up/margin, the payments received against debit notes by one employer-company upon the other employer-companies, will not partake the character of consideration for any service, but will merely represent reimbursement of shared costs. 7.3. In these circumstances, we remand the matter to the Commissioner for deciding; first, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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