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TMI Blog2023 (1) TMI 1470X X X X Extracts X X X X X X X X Extracts X X X X ..... bid to mean any activity carried out by a person for another for consideration, and includes a declared service. . On reading of the said definition clause, it transpires that in order to constitute a service, there must be involvement of more than one person i.e., a service provider and a service receiver; and that there must be consideration for provision of such service. The phrase consideration explained in the Explanation, appended to Section 67 ibid has provided that consideration includes any amount that is payable for the taxable services provided or to be provided. In the present case, the appellants herein have not provided any taxable service to their group companies, which is evident from both the SCN and the impugned order. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roup companies. The said expenses do not relate to any supplies made to the appellants. Incurrence of such expenses were used to be reimbursed by the group companies at actual. The appellants also share cost of common expenditure that has been incurred by them, with their group companies in accordance with company's group policy. To recover the said expenses, the appellants issue debit notes in favour of their group companies. The appellant did not pay any service tax on the transactions made by them with their group companies, owing to the reason that there is no provision of any taxable service between them and it was mere arrangement of accounting such reimbursable expenditure. 1.3 During the course of audit of the books of accounts und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i Mumbai vide Order-in-Original No. 83/CGST-M/Commr/KV/2018-19 dated 30.03.2019 (for short, referred to as 'the impugned order'), in confirming service tax demand of Rs. 11,71,17,556/- along with interest. Besides, the impugned order has also imposed penalties of Rs. 1,17,11,756/- and Rs. 10,000/- under Section 76 ibid and 77 ibid, respectively. 1.5 Feeling aggrieved with the impugned order dated 30.03.2019, the appellants have preferred this appeal before the Tribunal. 2. Heard both sides and examined the case records. 3. On perusal of the case records, we find that in order to have the cost effectiveness, the appellants incur various expenses for and on behalf of their group companies and cost of such services were recovered as reimbur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovider and charged, in the course of providing or agreeing to provide a taxable service, except in such circumstances, and subject to such conditions, as may be prescribed; (iii) any amount retained by the lottery distributor or selling agent from gross sale amount of lottery ticket in addition to the fee or commission, if any, or, as the case may be, the discount received, that is to say, the difference in the face value of lottery ticket and the price at which the distributor or selling agent gets such ticket." 5. For deciding the issue in hand, clause (ii) in the Explanation (supra) is relevant, which provides that any reimbursable expenditure or cost incurred by the service provider for provision of the taxable service is to be co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t are only reimbursement for the services procured for their group companies. Thus, the reimbursement of the cost/expenses incurred by the appellants as per actual, cannot be regarded as consideration, flowing to the appellants towards the taxable services provided by them. In other words, the amount claimed in the debit notes are for the simple reimbursement of the cost/expenses incurred by the appellants in terms of the cost sharing arrangements with the group entities, with the only purpose of cost effectiveness, having no service element involved therein. Therefore, we are of the considered view that in absence of any provision of service by the appellants to their group companies, mere claim of reimbursement of actual cost and expense ..... X X X X Extracts X X X X X X X X Extracts X X X X
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