CESTAT ruled that service tax demand under Business Support ...

Service Tax Not Applicable on Group Company Cost-Sharing Arrangements Without Service Element, CESTAT Rules in 2008 Agreement.

January 28, 2025

Case Laws     Service Tax     AT

CESTAT ruled that service tax demand under Business Support Service category was unsustainable for cost-sharing arrangements among group companies, as no service element existed per the agreement dated 01-04-2008. The tribunal rejected service tax demand based on differential values between Profit & Loss Account and ST-3 returns, noting insufficient adjudication findings. The extended period limitation for CENVAT credit recovery was invalidated due to absence of suppression or willful misstatement allegations. Following SC precedent on cost-sharing arrangements, CESTAT held that mere expense distribution among group entities doesn't constitute taxable service. The impugned order was set aside and appeal allowed, establishing that cost-sharing without service component isn't subject to service tax levy.

View Source