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TMI Blog2017 (9) TMI 1066X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant and thereafter to be shared with other group companies. In such arrangement, there is no scope for tax liability on the part of the appellant under the category of BAS. The Hon’ble Supreme Court in Gujarat State Fertilizers and Chemicals Ltd. and Anr. Vs. CCE [2016 (12) TMI 103 - SUPREME COURT], examining a similar set of facts, held that sharing of expenditure for common facilities cannot be treated as service by one to another in such arrangement. There is no taxable service in the arrangement as discussed in the present appeal - appeal allowed - decided in favor of appellant. - Service Tax Appeal No.1015 of 2011 - ST/A/55823/2017-CU[DB] - Dated:- 3-8-2017 - Shri S.K. Mohanty, Member (Judicial) And Shri B. Ravichandr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... morandum of Arrangement entered into by all group companies, the appellant acted in their capacity as a nodal person to incur all the expenditure with relation to sales, marketing and promotion of business, the services for which is provided by third parties. These services were actually availed by group companies and the expenses defrayed by the appellant and recovered thereafter, on proportionate basis, from the group companies in terms of the arrangement already approved. His contention is that they have not provided any service to the group companies. The services by third party are for all the group companies and the payments are routed through them. Such sharing of expenditure on actual basis, without any mark up, will not attract any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able consideration. We note that the Original Authority also recorded that these services were actually rendered by third parties to the appellant. Apparently, it would mean that the appellants received the service and acted as procurer of such service for or on behalf of the group companies. We find such inference is not factually as well as legally tenable. The appellant is not per-se engaged in promoting sales or business of group companies. No evidence to that effect has been brought out. In fact, the arrangement is all group companies will benefit from a sales promotion and other related activities of third parties, for which expenses are to be borne by the appellant and thereafter to be shared with other group companies. In such arran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrangement is not liable to service tax under BAS. The overall scope of the agreement indicates that it is not for rendering of service by one to another. Rather a common pool of resources required for running and maintaining the facilities of IHC successfully was attempted in terms of the agreement and the gross revenue is also shared showing the common intent. For such situation, we do not find a service provider service recipient relationship liable to service tax . 6. Similarly, in Reliance Ada Group Pvt. Ltd. Vs. CST, Mumbai IV 2016 (43) S.T.R. 372 (Tri. Mumbai), the Tribunal observed as below :- 5.3 Admittedly, the object of the appellant company as per the Memorandum of Association is to promote, manage, administe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal observed as below :- 6. Regarding a tax liability under Business Auxiliary Services , I find that the appellant were getting certain considerations from their sister concern towards common pool expenses, dividend, refund of bond money etc. The appellant pleaded that there are common expenses for facilities like canteen, transportation within their group companies. There is no promotional activities involved in sharing the expenditure. I note that the impugned order simply recorded that all these services tantamount to provisions of services on behalf of the clients and accordingly, the appellants are liable to tax under Business Auxiliary Services . It is not clear as to what type of service is being provided by the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X
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