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TMI Blog2024 (11) TMI 1183X X X X Extracts X X X X X X X X Extracts X X X X ..... ry Reorganization & Regulation Act 2003. Under this Act, the erstwhile Gujarat Electricity Board (GEB) was split in to separate companies as follows: i) Gujarat Urja Vikas Nigam Limited (GUVNL), the holding Company. ii) Gujarat State Electricity Corporation Limited (GSECL), a generation company & wholly owned subsidiary of the holding company. iii) Gujarat Energy Transmission Corporation Limited (GETCO), a transmission company & wholly owned subsidiary of the holding company. iv) Madhya Gujarat Vij Company Limited (MGVCL), a distribution company & wholly owned subsidiary of the holding company. v) Uttar Gujarat Vij Company Limited (UGVCL), a distribution company & wholly owned subsidiary of the holding company. vi) Paschim Gujarat Vij Company Limited (PGVCL), a distribution company & wholly owned subsidiary of the holding company. vii) Dakshin Gujarat Vij Company Limited (DGVCL), a distribution company & wholly owned subsidiary of the holding company. 1.2 Out of the above seven companies, four companies i.e. GUVNL, GETCO, GSECL & MGVCL have registered & corporate offices at Vadodara within one compound. Upon the implementation of the Financial Restructuring Plan (FRP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch are actually provided by the third parties to the appellant and appellant merely recovers share of the other group companies from them on actual basis without any markup. Thus, appellant company is acting as pure agent or other group companies, the applicable service tax has already been charged by the service provider in their invoices which was paid by the appellant. She submits that this issue is no longer res-integra as the same is covered by the Hon'ble Supreme Court judjment in the case of M/s. Gujarat State Fertilisers & Chemicals Limited & Anr vs. Commissioner of Central Excise, Civil Appeal Nos.4066-4067/2015. She also placed reliance on the CESTAT-Ahmedabad decision in the case of Hazira Lng Pvt. Ltd. vs. CST-Service Tax-Ahmedabad, Service Tax Appeal No.596 of 2011. She further submits that if at all the service tax is payable, the same is available as Cenvat credit to their own group companies. Hence, the entire situation is revenue neutral. In support she placed reliance on the decision of Hon'ble Gujarat High Court in the case of CCE vs. Ineos ABS Ltd 2010 (254) E.L.T. 628. The said judgment was upheld by the Hon'ble Supreme Court reported in Comm. Vs. Indeos ABS Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s first to GSFC's premises and from there it is diverted in the ratio of 60:40, meaning thereby that GSFC receives 60% of the HCN whereas GACL receives 40% of the supply in accordance with their respective requirement. To enable GACL to receive this HCN through common pipeline, arrangement/agreement was entered into between these two parties. For this purpose, handling facilities were installed in the premises of GSFC. However, fact remains, for which there is no dispute, that for installation of these facilities both the parties had contributed towards the investment. Since the said handling facilities are in the premises of GSFC, incineration also takes place at the said premises. Handling facilities expenditure thereof is shared equally by both the parties. That is clearly provided in the agreement/arrangement that was agreed to between the parties and is reflected in the Minutes dated 06.07.1980. Once these facts are accepted, we find that handling portion and maintenance including incineration facilities is in the nature of joint venture between two of them and the parties have simply agreed to share the expenditure. The payment which is made by GACL to GSFC is the share o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w to avoid litigation, they treated it as business support service." 4.1 It was claimed by Shri Sujal Shah that the Company neither received the payment till 31.03.2008, nor there was any possibility of receive it in future. Consequently they wrote off the said amount in their books of accounts on 31.03.2008. 4.2 Prior to 10.05.2008, the explanation C to Section 67 read as under: "gross amount charged' includes payment by cheque, credit card, deduction from account and any form of payment by issue of credit notes or debits notes and book adjustment." With effect from 10.05.2008, the said explanation C was substituted with the following explanation: "gross amount charged' includes payment by cheque, credit card, deduction from account and any form of payment by issue of credit notes or debits notes and book adjustment, and any amount credited, as the case may be, to any account, whether called "suspense account" or by any other name, in the books of account of a person liable to pay service tax, where the transaction of taxable service is with any associated enterprise". 4.3 The appellants have contended that they have not provided any services to their associated compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce provided by GSFC to GACL for which it is charging GACL. 16. We are, thus, of the opinion that the second ingredient has not been established in the present case and the question of service tax does not arise. In view thereof, it is not necessary to go into the question as to whether receiving of HCN through the said common pipeline in the tank which is setup by the GFSC and GACL amounts to 'storage' or not and we leave the said question open. 17. For the aforesaid reasons, the demand of 'service tax made by the respondent is unwarranted and is hereby set aside. We, thus, allow these appeals thereby quashing the Adjudicating Authority's order as well as the order of the CESTAT." In the light of the above observation of Hon'ble Apex 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. In this regard the observations of Tribunal in the case of Reliance Ada Group Pvt Ltd Vs CST2016 (43) STR 372 (T) also became relevant: "5.5 It is therefore clear that common services are not 'p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ind that these observations and findings of the adjudicating authority emanate from the confusion that the Appellant provides the services in question, whereas the Appellant at best acts as an agency to procure services and allocate cost to various Participating Group Companies for which it can claim an amount of Rs One Crore jointly from all participating group companies as its fees in addition to the reimbursement of the total costs incurred Towards such common services. 5.9 No direct statutory provision or any binding precedent could be shown to us by the Revenue, which for the relevant time, covers the activity of incurring costs and seeking reimbursements as Pure Agent under the purview of the "Business Support Services" under Clause (105) of Section 65 of the Finance Act, 1994 as amended by Finance Act, 2006 There is no dispute on the fact that no additional fees or profits or consideration for Pure Agent services is received by the appellant, who has merely recovered actual costs incurred from the Participating Group Companies. 5.10 We find that the definition of 'Business Support Services' covers only specific activities in its inclusive part of the definition. ..... 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