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2019 (11) TMI 386

..... ment 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 Se .....

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..... . REC Power Distribution Co.Ltd. and M/s. REC Transmission Power Co. Ltd. These amount were received by the Appellant under the description Establishment Expenses and Administrative Expenses and the amount had been shown accordingly in their financial statements such as, balance sheet, profit and loss account etc. On being asked by the Department with regard to the nature of these receipts from their subsidiary companies, it was explained by the Appellant that the above mentioned amount had been received by it from the subsidiary companies for providing expert manpower to them for discharging certain functions and since these persons remained posted with the subsidiary companies, the appellant had received the reimbursement of the expenditure which the appellant have incurred on these employees in the form of salary, allowance etc. This amount has been accounted for in their books of accounts under the head of Establishment Expenses and Administrative Expenses received from the subsidiary companies. 2. The 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 categor .....

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..... st amounting to ₹ 67,41,753/- (Rupees sixty seven lacs forty one thousand seven hundred fifty three only) at the rates applicable on the amount of service tax from them under Section 75 of the Finance Act, 1994; and therefore, since the said amount has already been paid by the Large Tax Payer, accordingly, I hereby appropriate the same under the Act ibid against the demand so confirmed. (v) I, hereby, impose penalty equal to one per cent of the confirmed demand, for each month, for the period till the deposit of the said amount, up to a maximum of twenty five per cent of the tax amount in terms of Section 73(4A) of the Finance Act, 1994 for the reason already discussed above. (vi) I, hereby, impose penalty of ₹ 10,000/- under Section 77(2) of the Finance Act, 1994 for contravening the provisions of Section 66, 67 and 70 of the Finance Act, 1994 and Rule 6 & 7 of the Service Tax Rules, 1994. 5. The Appellant is before us against the above mentioned impugned Order-in-Original. The Learned Counsel appearing on behalf of the Appellant contended that it had received reimbursement of the amount of salary paid to the employees who remained posted with the subsidiary compan .....

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..... e service tax liability as demanded under the impugned show cause notice on 26 March, 2013 and the department had also been informed on 28 March, 2013 which was much before the issuance of show cause notice. The learned Counsel vehemently contested the invocation of the extended time proviso in this case, as the Appellant had no intention of evading the service tax as it was always complying with the provisions of service tax laws. It has also been stated that the financial statement of the Appellant had been audited by the Central Excise Revenue Audit of C&AG for the period 2008-2009 and 2009-2010 in the year 2010 and no audit objection was raised on this issue, inspite of the fact that reimbursement of cost of their employees provided to it by the subsidiary companies had always been mentioned in their books of accounts. 9. The learned Counsel has relied upon following decisions in support of the arguments: i) Anand Nishikawa Co. Ltd. Vs. CCE [2005 (09) LCX0013]; ii) Singh Brothers vs CCE [2009 (14) STR 552]; iii) CCE vs. Chemphar Drugs & Liniments [1989 (40) ELT 276]. 10. It has further been submitted that since the entire amount was been deposited much before the issuan .....

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..... customer relationship management services, accounting and processing of transactions, operational or administrative assistance in any manner, formulation of customer service and pricing policies, infrastructural support services and other transaction processing. Explanation.- For the purpose of this clause, the expression infrastructural support services includes providing office along with office utilities, lounge, and reception with competent personnel to handle messages, secretarial services, internet and telecom facilities, pantry and securities [Section 65(104c)]. 14. 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 ex .....

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..... aries is a taxable event falling under the category of Business Support Services under Section 65(105)(zzzq) of the Act ibid. 24.8 Having ascertained so, I do not find it exclusively to discuss the inclusive part as the basic part itself covers the impugned services. However, for academic purposes it can be stated that the definition is exhaustive and the specific items mentioned under the inclusive part is only for ready reference and such items are essentially to be considered as part of the definition. In any case, the said inclusive part does not limit the scope of the definition to the said items. 16. 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 . The Central Board of Excise and Customs in its clarification issued from F.No. 137/35/2011-ST dated 13 July, 2011 has provided that: Representation has been receive d seeking clarification on applicability of service tax under Manpower Recruitment and Supply service in .....

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