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2015 (12) TMI 93 - HC - Service TaxBusiness Support Service - owner allowed to use its entire infrastructure to the assessee - assessee was manufacturing and doing the business in the name of owner and received huge money as conducting charges - Held that - Under the agreement, the Assessee agreed to pay to M/s. KSM an amount of ₹ 30 lacs towards use of infrastructure for manufacture of liquor. As per clause 2 of the agreement, all profits and losses in respect of the manufacturing and sale of the products in the distillery division are on account of the Respondent Assessee. The Respondent Assessee had actually taken over the distillery unit of M/s. KSM. It undertook the manufacturing activity as well as sale of products. There was no evidence on record to show that the Assessee had received any amount from M/s. KSM for providing any service in relation to the business. It is the conducting agreement which has been referred extensively. Its clauses have been read together and harmoniously to conclude that the arrangement or deal in the present case is of such nature that M/s. KSM s distillery unit is taken over for conducting and managing by the Assessee. The Assessee is therefore responsible for any profits being generated or losses sustained. The nature of the transaction therefore would not fall within the meaning of support services for business or commerce. The conducting of the running business and its management and administration is therefore the basis of the finding. We are of the opinion that such factual findings and which are consistent with the materials placed on record cannot be termed as perverse or vitiated by any error of law apparent on the face of the record. - Appeals do not raise any substantial question of law - Decided against Revenue.
Issues:
1) Whether the activity conducted by the Respondent is taxable under the category of 'Business Support Service'? Analysis: The case involves a dispute regarding the taxability of services provided by the Respondent Assessee to M/s. Kolhapur Sugar Mills Ltd. for manufacturing and selling liquor. The Revenue contends that the services fall under 'Business Support Service' and are taxable under section 65(104C) of the Finance Act, 1994. The Respondent received conducting charges from M/s. KSM, leading to a demand for service tax. The Respondent argued that the services provided did not fall under the taxable category as M/s. KSM was not performing any activities, and the arrangement did not constitute a service. The Tribunal allowed the appeal, stating that the Assessee conducted the main business activities, and M/s. KSM paid service tax under a different category, hence the amount was not payable by the Assessee. The Revenue challenged the Tribunal's decision, arguing that the services provided by the Assessee qualified as 'Business Support Service' as per the Finance Act, 1994. The Revenue emphasized the definition of taxable service under section 65 and the specific inclusion of support services such as managing distribution, logistics, and infrastructural support services. The Revenue contended that the conducting agreement did not change the nature of the services provided, and service tax was applicable. The Revenue sought admission of the appeal based on the alleged error in the Tribunal's decision. On the other hand, the Assessee argued that the agreement with M/s. KSM did not involve providing taxable services under the 'Business Support Service' category. The Assessee maintained that the arrangement was for conducting and managing the business on behalf of M/s. KSM, and the fixed fees paid did not constitute taxable services. The Assessee supported the Tribunal's order, highlighting that no evidence existed to prove that the Assessee received any sum from M/s. KSM for services rendered. The Assessee contended that the Tribunal's decision was based on factual findings and should not be disturbed. The Tribunal's decision was based on a thorough examination of the conducting agreement and the nature of services provided by the Assessee. The Tribunal found that the Assessee took over the distillery unit of M/s. KSM and was responsible for the manufacturing and sale activities. The Tribunal concluded that the services provided did not fall under the 'Business Support Service' category, especially considering M/s. KSM's payment of service tax under a different classification. The Tribunal's decision was upheld, emphasizing that the factual findings and interpretation of the conducting agreement supported the conclusion that no substantial question of law was raised. The appeal was dismissed, affirming the Tribunal's decision.
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