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TMI Blog2017 (5) TMI 1252X X X X Extracts X X X X X X X X Extracts X X X X ..... okable as the transaction has been properly documented and/or recorded in the books of accounts. Matter remanded back to the Adjudicating Authority for the limited purpose of re-calculation of demand under “Support Service of Business or Commerce” for the period with effect from 01/05/2011 - appeal allowed by way of remand. - ST/53163/2014-CU[DB] - FINAL ORDER NO. 70340/2017 - Dated:- 1-2-2017 - Mr. Anil Choudhary, Member (Judicial) and Mr. Anil G. Shakkarwar, Member (Technical) Shri Dharmendra Srivastava, Chartered Accountant, for Appellant Shri Sumanta S. Chattopadhyay, Superintendent (AR), for Respondent ORDER Per: Anil Choudhary The issue in this appeal by the appellant manufacturer is whether they are liable to pay service tax on the receipts from United Breweries Ltd.; to whom they have given and/or leased exclusive usage of the facilities for manufacturing of beer. 2. The admitted facts as per the impugned order in original passed by ld. Commissioner are - the revenue officers on visit to the appellant s unit in August 2011, collected relevant records namely the OMC Agreement dated 15/12/2008 between the appellant and United Breweries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rough contractor registered/to be registered with applicable government departments and there will be no employer employee relationship between M/S UBL and the workers of MGW s contractors, staff executives appointed through approved contractors or otherwise. M/s MGW shall ensure timely payment of wages and salaries to all the factory workers and staff and they shall keep indemnified M/s UBL against all liabilities for wages, salaries, Provident Fund, Gratuity, claims actions arising out of the Agreement for the entire staff, workers, casual workers, security staff and contract workers related to factory operations during the tenure of the said Agreement. M/s MGW represents and assures that the existing manufacturing facilities provided can produce a minimum guaranteed quantity of 11 lakh cases per annum (according to M/s UBL s brewing cycle) which is agreed to be manufactured by M/s UBL from the date of commencement i.e. December 15, 2008 through the tenure of the said Agreement. For utilizing the facility, M/s UBL shall pay a sum of ₹ 1 crore per annum as Facility Fee (Net amount) to the Noticee. The same will be payable on a monthly basis. M/s MGW shall also be r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant to their client - UBL as noticed herein above, can be categorized under Support Services of Business or Commerce under section 65(104c) of the Finance Act, 1994 to provide infrastructural support service which is incidental to support the client s Business or Commerce. It further appeared to Revenue that the essential condition attracting levy of service tax under the category renting of immovable property as defined under Section 65(90a) of the Act read with Section 65(105)(zzzz) of the Finance Act, 1994, the essential condition attracting the levy of Service tax under this category is that there should be renting etc. of immovable property and/or renting, letting, licensing, etc. must be of immovable property. Immovable property in legal sense covers land buildings and land appended to the building. According to General Clauses Act, 1897 Section 3(26) - immovable property shall include land, benefits to arise out of land and things attached to the earth or permanently fastened to the earth. Further under the Income Tax Act immovable property definition was noticed which provides - land or any building or part of a building and includes where any land or any building o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Being aggrieved the appellant-assessee is in appeal before this Tribunal. The ld. Counsel for the appellant Mr. Dharmendra Srivastava, Chartered Accountant, have urged that the demand raised and confirmed by the Department under the category of Renting of immovable property service as defined in Explanation 1 of Section 65(105)(zzzz) of the Finance Act, 1994 which does not cover renting/providing manufacturing facilities including plant and machinery, hence activity of the appellant is not taxable. Further reference to the definition of immovable property as liable revenue under the General Clauses Act, 1897 read with the Income Tax Act, the same is not permissible since scope of renting of immovable property has been defined in Section 65(105)(zzzz) of the Finance Act, 1994 of Chapter V of the Finance Act and ld. Commissioner have erred in travelling beyond the scope of definition under the Finance Act, 1994. Even if it is presumed that infrastructure facilities are being used for manufacturing of beer which was subject to be State Excise duty, such manufacturing for UBL shall not be subject to Service tax by virtue of exclusion clause of section 65(90) of Chapter V of the Fina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T. So far the reliance placed by ld. Commissioner on the ruling in the case of Bhagawathy Traders Versus Commissioner of Central Excise, Cochin 2011 (08) LCX 0065, the same is not against the appellant. Para-6.2 of the decision clearly states that payment made on behalf of service recipient under contractual obligation shall be deductible as reimbursement. In present case, payment was made as per terms of para-7(d) of agreement dated 15/12/2008 which was reimbursed by service recipient that is UBL. It is further stated that the extended period of limitation is not invokable and penalties are not impossible as matter involves dispute of classification. 7. The ld. A. R. for Revenue stated that the main issues involved in the present appeal are - (i) by the renting of entire manufacturing unit together with plant and machineries etc. towards production of finished goods to UBL in lieu of rental of ₹ 1 Crore per annum is classifiable under Renting of immovable property service (ii) whether payments by reimbursement received by the appellant on account of expenditure towards wages etc. are chargeable to service tax under Business Support Service (iii) whether longer per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d towards wages etc., are chargeable to service tax under Business Support Service , it is urged by Revenue that as per the agreement between the appellant and UBL, it unmistakably shows that the same has been made for the two identifiable different purposes. First, to provide/let out the entire factory including plant and machinery to UBL by the appellant for manufacture of final products by UBL, and secondly to provide various other services to support the production of final products by UBL. As per the agreement, the appellant was responsible for hiring its entire staff, workers, casual workers etc. on their roll or through contractors and there would be no employer-employee relationship between UBL and the workers of the appellant. The appellant would be responsible for other works like maintenance of plant and machinery, insurance etc. As per the agreement, UBL have no legal or contractual obligation for payment to the workers of the appellant or to any other service provider for any other services received by the appellant. Also the said agreement is made on principal to principal basis. There is no Principal-Agent relationship between the appellant and UBL as per the said a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e basis of the facts and circumstances of the case, the activity conducted by the assessee is taxable under category of business support service especially when the assessee had received a sizeable amount under the name and guise of Conducting Charges against the activities. In the said matter the brief facts before the High Court where that there was an agreement between Kolhapur Sugar Mills Ltd. Karan Agencies for manufacturing and sale of liquor under the brand name KSM. The plant and machinery owned by KSM, was allowed to be used with entire infrastructure by the respondent-Karan Agencies, for a consideration of ₹ 30 lakhs per annum. The respondent-Karan Agencies, conducted entire business of manufacture of liquor, its sale and even effected the recovery of the sale proceeds in the name of KSM. The books of account were maintained in the name of KSM and sale proceeds were also credited to the account of KSM. At the end of each financial year, after settlement of accounts, the balance in Profit Loss Account was paid by KSM to the respondent-Karan Agencies, after retaining an amount of ₹ 30 lakhs being the consideration agreed against use of infrastructure plant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by any error of law apparent on the face of the record. Any larger issue or controversy, therefore, need not be considered. Once the conclusion is reached as above, then, the Appeals do not raise any substantial question of law. They are accordingly dismissed. 11. Thus, relying on the ruling of Bombay High Court we have no hesitation to hold that so far the fixed lease rent of ₹ 1 Crore per annum received by the appellant, the same is not taxable towards Renting of immovable property service as there is no renting out of land and building along with its fixtures. The appellant have only let out plant and machinery and the manufacturing facility. Which does not qualify under the definition of Renting of immovable property service . So far the other issue is concerned regarding liability of service tax on the amount of reimbursements received from UBL towards wages etc., we find that the same is taxable with effect from 01/05/2011 under the category of Business Support Service . Accordingly, we hold the support service taxable under the category Support Service of Business or Commerce under Section 65 (104c) of the Finance Act, 1994. Accordingly, we hold that ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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