2015 (7) TMI 65 - AT - Service Tax

Services of Manpower on cost sharing basis to group companies - Service Tax liability for import of Intellectual Property Rights - Held that - We find that in the similar facts and circumstances of the case in another group company of the appellant, K. Raheja Real Estate Services Pvt. Ltd. 2013 (6) TMI 564 - CESTAT MUMBAI , wherein similar services were given to other group companies, on cost sharing basis, this Tribunal have set aside the impugned order. In view of similar facts and circumstances of service/activity in this appeal, requiring proper verification we remand this matter also back to the Commissioner, on the issue of taxability of disputed amount under business auxiliary service in terms of the direction of the Tribunal as given in the earlier order, quoted hereinabove. So far the other demand of ₹ 87,536/ - for import of service is concerned, the same is not contested and accordingly stands confirmed. As regards the penalties imposed, we find that the issue relates to interpretation and there is no case of any fraud or deliberate defiance of law. Thus, the penalty of ₹ 87,566/- is deleted under Section 78 and balance penalty in respect of Service Tax liability for business auxiliary service is set aside for reconsideration in accordance with law. - Decided partly in favour of assessee.

Summary

Issues:
1. Service Tax liability for providing services of Manpower on a cost-sharing basis to group companies.
2. Service Tax liability for import of Intellectual Property Rights and Business Auxiliary Service.
3. Penalty imposition under Section 78.

Analysis:

Issue 1: Service Tax liability for providing services of Manpower on a cost-sharing basis to group companies.
The appellant, a group company, was found providing services of Manpower to its group companies on a cost-sharing basis. The Revenue confirmed the demand, stating that the appellant was providing business auxiliary service to group companies, resulting in a Service Tax liability of Rs. 46,54,271/-. The appellant contested the demand, but the impugned order upheld the Service Tax liability. However, a similar case involving a different group company was cited where the Tribunal set aside the order due to lack of reasoning on classification and valuation aspects. Consequently, the present matter was remanded back to the Commissioner for reevaluation on the taxability of the disputed amount under 'business auxiliary service' based on the Tribunal's directions. The penalty imposed under Section 78 was deleted as there was no evidence of fraud or deliberate defiance of the law.

Issue 2: Service Tax liability for import of Intellectual Property Rights and Business Auxiliary Service.
Regarding the demand of Rs. 87,566/- for the import of services, the same was not contested and stood confirmed. The Tribunal directed the Commissioner to pass a reasoned order after providing a sufficient hearing to the appellants within four months from the date of receipt of the order. The appellant was instructed to appear before the Commissioner with a copy of the order to seek an opportunity for a hearing.

Issue 3: Penalty imposition under Section 78.
The penalty of Rs. 87,566/- was deleted under Section 78 due to the absence of fraud or deliberate defiance of the law. The remaining penalty in relation to Service Tax liability for 'business auxiliary service' was set aside for reconsideration in accordance with the law.

In conclusion, the Tribunal remanded the matter back to the Commissioner for reevaluation on the taxability of the disputed amount under 'business auxiliary service' and directed a reasoned order to be passed within a specified time frame. The penalty under Section 78 was deleted where no fraud or deliberate defiance of the law was established, and the remaining penalty was set aside for reconsideration.