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TMI Blog2024 (11) TMI 1183X X X X Extracts X X X X X X X X Extracts X X X X ..... decisions which are on the identical facts of the present case service tax demand is not sustainable. Accordingly, the impugned orders are set aside, appeals are allowed. - HON'BLE MEMBER ( JUDICIAL ) , MR. RAMESH NAIR And HON'BLE MEMBER ( TECHNICAL ) , MR. RAJU Ms. Neeta Ladha , Chartered Accountant appeared for the Appellant Shri Anoop Kumar Mudvel , Superintendent ( AR ) appeared for the Respondent ORDER RAMESH NAIR The issue involved in the present appeal pertains to whether reimbursement of expenses recovered by the appellant from its group companies M/s Gujarat State Electricity Corporation Limited, M/s Gujarat UrjaVikas Nigam Limited M/s Gujarat Energy Transmission Corporation Limited, pursuant to common cost sharing can be considered as consideration towards the provision of Business Support Services under Section 65(104c)of the Finance Act,1994 for the purpose of charging service tax. 1.1 The appellant is a power distribution Company which came in to existence pursuant to the Gujarat Electricity Industry Reorganization Regulation Act 2003. Under this Act, the erstwhile Gujarat Electricity Board (GEB) was split in to separate companies as follows: i) Gujarat Urja ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Common expenses for maintenance/usage of such assets have been apportioned and debited to Holding Company / other fellow subsidiary Companies based on reasonable basis. However, for such other un-identifiable expenses or income, no provision has been made for any such charges receivable or payable to or by the Company. 1.5 The case of the department is that the reimbursement of actual expenses shared by the group companies belonging to government of Gujarat is falling under the category of business support service. Hence, the same is liable to service tax. 2. Ms. Neeta Ladha, Ld. Chartered Accountant appearing on behalf of the appellant submits that there is no provision of service among the group companies, its only common expenditure which has been shared by all the group companies, therefore in absence of any service, there is no question of any levy of service tax. It is her submission that the expenditure for which the sharing was done is towards the services which are actually provided by the third parties to the appellant and appellant merely recovers share of the other group companies from them on actual basis without any markup. Thus, appellant company is acting as pure a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company has been considered in the following decision:- M/s Gujarat State Fertilizers Chemicals Limited Anr vs. Commissioner of Central Excise:- We have considered the aforesaid submissions in the light of the material placed on record. We shall advert to the second aspect namely, as to whether the arrangement between GSFC and GACL amounts to providing any services by GSFC to GACL and 50% incineration expenses incurred would constitute charges for providing such services. There is no dispute about the manner in which HCN is received through pipeline from M/s. Reliance Industries Ltd. by GSFC and GACL and then shared in the ratio of 60:40 respectively. GSFC and GACL are public sector undertakings, as already mentioned above. Since HCN is to be received through pipeline, it is abundantly clear that in order to save the expenditure, both the parties agreed that there should be a common pipeline. Once HCN is received through the said common pipeline, it comes first to GSFC's premises and from there it is diverted in the ratio of 60:40, meaning thereby that GSFC receives 60% of the HCN whereas GACL receives 40% of the supply in accordance with their respective requirement. To enable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tify the requirement for a joint or a common function that may be required by any of the associated enterprises namely Hazira Lng Pvt Ltd, Hazira Ports Pvt Ltd and Hazira Gas Pvt Ltd., respectively and to jointly procure and use the said services. The said agreement also required the associated enterprises to contribute towards their allocated share in cost of common function. The appellants had raised debit notes on associated enterprises and in the said debit notes they have treated the said cost sharing as supply of business support services. In the ST-3 returns for the period October, 2007 to March, 2008, the appellant had made the following remark in their ST-3 returns: The amount shown as taxable service charged represents the value to be contributed by our associated enterprise which in our view is not subject to Service Tax . Though the said transaction did not result into rendition of any taxable service, taking a conservative view to avoid litigation, they treated it as business support service. 4.1 It was claimed by Shri Sujal Shah that the Company neither received the payment till 31.03.2008, nor there was any possibility of receive it in future. Consequently they wrote ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, handling facilities were installed in the premises of GSFC However, fact remains, for which there is no dispute, that for installation of these facilities both the parties had contributed towards the investment Since the said handling facilities are in the premises of GSFC, incineration also takes place at the said premises. Handling facilities expenditure thereof is shared equally by both the parties. That is clearly provided in the agreement/arrangement that was agreed to between the parties and is reflected in the Minutes dated 6-7-1980 Once these facts are accepted, we find that handling portion and maintenance including incineration facilities is in the nature of joint venture between two of them and the parties have simply agreed to share the expenditure. The payment which is made by GACL to GSFC is the share of GACL which is payable to GSFC By no stretch of imagination, it can be treated as common service provided by GSFC to GACL for which it is charging GACL. 16. We are, thus, of the opinion that the second ingredient has not been established in the present case and the question of service tax does not arise. In view thereof, it is not necessary to go into the question a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lent and resources required for carrying out their business activities. No taxable service is provided by the Appellant and therefore in absence of rendition of such service by the Appellant to the Participating Group Companies, the demand of Service tax cannot sustain. 5.8 It is seen that in the impugned Order contrary to the above findings recorded in Para 4.3 regarding procuring of services which are reproduced hereinabove, the adjudicating authority in Para 4.5 onwards of the impugned Order erroneously proceeds on the basis that those services were provided by the appellant. This self-contradictory finding is not supported by any documentary evidence. On the basis of such erroneous self contradictory findings, the adjudicating authority holds that the activities do fall under the definition of 'Business Support Services under Section 65(104c) read With Section 65(105)(zzzq). We find that these observations and findings of the adjudicating authority emanate from the confusion that the Appellant provides the services in question, whereas the Appellant at best acts as an agency to procure services and allocate cost to various Participating Group Companies for which it can clai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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