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TMI Blog2019 (3) TMI 875X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant. And, thus, the appellant cannot claim that the amounts received from the subsidiary are in the nature of reimbursements - The building belongs to the appellant and, therefore, the payment of rent, rates and taxes, labour charges, repair and maintenance, generator expenses and insurance premium are all liabilities of the appellant and not of the subsidiary. Thus, these payments are not in the nature of reimbursements. Amounts received of electricity and telephone - Held that:- No tax can be demanded on the amounts of money paid by the subsidiary on count of electricity and telephone consumed on estimate basis. Similarly, for the activities done by the President, Executive Director and other Directors and employees on account of the subsidiary and payments made by the subsidiary to the appellant as a reimbursement of the travelling and other expenses would be in the nature of agencies function and excludable from the value of services. The matter is remanded to Original Authority for requantification. - Appeal No. ST/11275/2013-DB - A/10428/2019 - Dated:- 12-3-2019 - Mr. Ramesh Nair, Member (Judicial) And Mr. Raju, Member (Technical) For the appellant: Shri P.V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive Director and the following employees should be fully reimbursed by SKSE Securities Ltd. to Saurashtra Kutch Stock Exchange Ltd. i) One employee of membership services section. ii) One employee of listing section. iii) One employee of investor service section. iv) One stenographer. v) One employee of accounts - finance section and vi) One peon. The above understanding has been based on the facts that in absence of any major activities in Saurashtra Kutch Stock Exchange Ltd., the minimum requirement of staff for Saurashtra Kutch Stock Exchange Ltd. will be only to the above extent. 2. It has been agreed between parties, that the expenses in the nature of Rent, Rates and Taxes, labour charges for up keeping of building, repairs and maintenance, generator expenses and insurance premium should be reimbursed to the extent of 70% of total expenses by SKSE Securities Ltd. to Saurashtra Kutch Stock Exchange Ltd. The above understanding has been based on the actual utilization of area by Saurashtra Kutch Stock Exchange Ltd. and by SKSE Securities Ltd. 3. It has been agreed between the parties that the expenses for consumption of electricity and other related ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by a service provider. A person selling the goods to another cannot treat cost of raw materials or the cost of labour or other cost components for inputs services, which went into the manufacture of the said goods as reimbursements. If the buyer enters into a contract for supply of raw materials after negotiating prices from the supplier for the raw materials and the raw materials are received by the manufacturer and the manufacturer pays the amounts to the supplier of raw materials and recovers the same from the buyer, it can certainly be considered as reimbursements. It is to be noted that in such a case, the manufacturer has no role about choosing the source of the materials procured or the price at which the materials procured and the manufacturer is not under any legal or contractual obligation to pay the amount to the supplier. However, if the manufacturer procures raw materials from a source of his choice at a price negotiated between him and supplier of the raw materials and uses the material for manufacture of the final products which he sells, the question of his collecting the cost of raw materials as reimbursement does not arise. The concept of reimbursement will aris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... providing services partly as cost of services and the rest as reimbursable expenses. 4.2 The impugned order identified the three issues as follows: (1) Whether the appellants are required to pay service tax under the category of Support Services of Business or Commerce for providing usage of the infrastructural facilities i.e., building, equipments, furniture and fixtures, computers and manpower to M/s. SKSESL or otherwise. (2) Whether the appellants are required to pay service tax under the category of Renting of Immovable Properties services for the amount received as maintenance charges from Bank of Baroda, canteen, Reliance Communication, State Bank of India and other members or otherwise. (3) Whether interest imposed under section 75 of the Act and penalties imposed under section 76,77, and 78 of the Act are justifiable or not. The impugned order essentially denies the benefit of exclusion of these amounts on the ground that the said amounts are not paid by the services recipient to service provider in his capacity as pure agent. A perusal of MOU shows that the part of the emoluments of the managing director and emoluments of a set of the empl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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