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TMI Blog2025 (1) TMI 848X X X X Extracts X X X X X X X X Extracts X X X X ..... ey may be indicating in their website various facilities being provided to the guests on its own - It is for the jurisdictional authorities to take up the matter and proceed against ITH, in case they are collecting the Service Tax under these bills and not remitting the same to the Department. In view of these factual details and documentary evidence shown, the confirmed demand of Rs 67,38,390 under the rent-a-cab service is not legally sustainable. Debit Notes raised on other associate enterprises wherein the demand of Rs. 28,54,978/- has been confirmed - HELD THAT:- The appellant was registered with the Service Tax department and has been discharging the service tax payments and also they were filing their ST3 returns. Quantification of demand towards rent-a-cab services as well as debit notes raised on associate enterprises have been obtained by the Revenue from the books of accounts maintained by the appellant - it is not seen that the appellant has indulged in any suppression in these matters. Further, the appellant could be carrying bonafide belief that no Service Tax is required to be paid on the rent-a-cab service being actually rendered by ITH. In respect of the debit note ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tional Travel House Limited to the appellant. The Department took the view that appellant was providing rent-a-cab services by hiring the vehicles from other agencies. On 18-10-2011, a Show Cause Notice was issued invoking the extended period provisions. The appellants, in response, submitted that they were only taking the payment from the guests and then forwarding it to ITH and not retaining any amount and at the same time, the appellant was not being paid any consideration by ITH. Thus, they stated that no service was being provided by them, neither to the guests nor to International Travel House Limited. 2. The appellants in the course of their business provided accommodation to the employees of other Division and such cost was debited to the account of that Division. The demand was raised on the same as consideration received from Associate Enterprises . The appellants clarified that the service has been rendered to the other Divisions of ITC and hence would amount to self service . After due process, the Adjudicating Authority confirmed the demand. Being aggrieved, the appellant is before the tribunal. 3. The Learned Counsel appearing on behalf of the appellant submits that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Books of Account of ITC Sonar, there would be contra entry, one entry for having received the amount from the guest and another debit entry showing that the same as being paid back to ITH. The appellant has not retained any part of the amount received from the guest and has passed on the amount received fully to ITH. Admittedly Department has not brought in any evidence that ITH has paid any commission or any other consideration amount to ITC Sonar. He submits that in fact the quantification itself is erroneous since the entire consideration received from the guest has been taken as the consideration received by ITC Sonar whereas the whole amount was passed on to ITH. The demand, if any, could have been made only if any consideration has been given by ITH to ITC which is not the case here. 5. The Learned Counsel next takes us to the point made by the adjudicating authority on the ground that appellant was an enterprise and different divisions were associate enterprises because of which he has held that even when the service is being provided between two different units of the associate enterprises, the Service Tax is required to be paid. The question of association between two ente ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide on account of limitation also. 10. The Learned AR reiterates the findings of the Adjudicating Authority. He submits that the appellant being a star hotel was providing rent-a-cab service which was being advertised in their website clearly stating that this is one of the services being provided by the hotel. He submits that the demand has been quantified based on the receipt of rent-a-cab service amount by the appellant from their guests. Therefore, he justifies the confirmed demand. 11. In respect of the demand on account of associate enterprises, he submits that Circular No. 334/1/2008-TRU dated 29/02/2008 has clarified that when there is a transaction between the associate enterprises, it is to be viewed as transaction between two independent enterprises. Therefore, the Service Tax is required to be paid on the debit notes raised by the appellant on their associate enterprises. 12. He submits that the details of non-payment of service tax on account of rent-a-cab services as well as on account of their transactions with associate enterprises has come out in open only because of the audit taken up by the department. Therefore, he justifies that the adjudicating authority has c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etails of Service Tax paid by ITH, we find that this is not required to be proved by the appellant. ITH is already registered as a Service Tax provider and they are responsible for the invoices raised by them wherein service tax charged is being shown. It is for the jurisdictional authorities to take up the matter and proceed against ITH, in case they are collecting the Service Tax under these bills and not remitting the same to the Department. In view of these factual details and documentary evidence shown to us, we find that the confirmed demand of Rs 67,38,390 under the rent-a-cab service is not legally sustainable. Accordingly, we set aside the impugned order to this extent and allow the appeal. 16. Coming to the issue of Debit Notes raised by the appellant, it would be important to go through the Circular 334/1/2008-TRU dated 29 February 2008. The relevant portions are extracted below:- 6.4 The term associated enterprise‟ has the same meaning as assigned to it in section 92A of the Income Tax Act, 1961. It is a relative concept i.e. an enterprise is an associated enterprise when it is viewed in relation to other enterprises. This concept is used in the Income Tax Act for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd not unit-wise. (iii) For service tax to be leviable, the provider and the client of Management Consultancy Services need to be two separate legal entity as construed from Section 65(72) of the Act which is not the situation in the instant case. (iv) It is usual practice that for internal accounting purposes and apportioning cost inter unit book adjustment are made in a corporate body. The Commissioner has not accepted the contention of the appellants and held that the internal accounting system of the appellants will not have any bearing on the payment of service tax. In our view, for the leviability of service tax, there should be a service providers and service receiver. As held by the Original authority (Asst. Commissioner) in the present case both the service provider and the service receiver are part of the corporate entity which is known as M/s. Precot Mills Ltd. It was emphasised that the debit note was issued only to evaluate the performance of Dyeing Unit as each unit is a separate profit center. In the case laws cited by the learned Chartered Accountant, the Hon‟ble High Court of Calcutta has held that when the club space is allowed to be occupied by any member o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is his contention that no Service Tax is payable when no service has been rendered by the Appellants to anyone else. In this connection, he relies on the ratio of the decision in the Precot Mills Ltd. v. CCE, Tirupathi reported in 2006 (2) S.T.R. 495 (Tri- Bang.). 4. After hearing both sides and perusal of the case records and the cited case law, we find that since the appellants have not rendered any service to any other person, their case is squarely covered by the ratio of the cited decision in the case of Precot Mills Ltd. (Supra). Hence, following the ratio of the said decision, we hold that the demand made against the appellants not sustainable in law. Accordingly, we set aside the impugned order and allow the appeal. 20. The Chennai Tribunal in the case of General Manager, BSNL Cellular Mobile Services Vs CGST CX, Tiruchirapalli-2019 (25) GSTL 238 (Tri-Chennai) has held as under:- 7. From the facts on record, we find that the disputed services pertain to interconnectivity provided by M/s. BSNL, Cellular Mobile Telephone Services (CMTS) Division and M/s. BSNL, appellants herein to their own landline network. Surely, by no stretch of imagination can these two Divisions of M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rent-a-cab services as well as debit notes raised on associate enterprises have been obtained by the Revenue from the books of accounts maintained by the appellant. We do not see that the appellant has indulged in any suppression in these matters. Further, the appellant could be carrying bonafide belief that no Service Tax is required to be paid on the rent-a-cab service being actually rendered by ITH. In respect of the debit notes raised on other divisions, the appellant should have carried bona fide belief that since they are all part of the Divisions of the same company, there is no need to pay any Service Tax on such activities. 23. We find that the Department has not brought in any documentary evidence or proof to the effect that the appellant has indulged in any suppression so as to evade payment of service tax on these activities. Further, as submitted by the appellant, if service tax was required to be paid on such services, the appellant would be eligible to take the Cenvat Credit which makes the entire exercise as that of revenue neutral. Even on this count, the appellant cannot be fastened with the allegation of suppression with an intent to evade payment of service tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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