2023-VIL-452-CESTAT-MUM-ST
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SERVICE TAX CESTAT Cases

Service Tax - Appellant is engaged in the business of manufacture and sale of cut and polished diamonds – confirmation of service tax demand under the category of “Business Support Service” and “Business Auxiliary Service” on receipt of value added services provided by the overseas entity – validity of service tax demand on availment of the value added services are linked to the supply of goods - HELD - apart from supplying the rough diamonds to the appellants, the overseas entity had supplied the value added service to the appellant, which were levied with the service tax demand by the department confirming those services to fall under the scope and ambit of Business Support Service - the value added services provided by the overseas entity are part and parcel of the rough diamond supplied by them and considering the commission amount on such services, the Customs Department had assessed the bills of entry by including such value in the transaction value for the purpose of levy of Customs duty - the intention of the legislature was to collect service tax under the category of Business Support Service on the outsourced services only. In the present case, since for provision of the value added services, the appellant had not outsourced services to the overseas entity, it cannot be said that such services provided by the overseas entity should be taxed under the category of Business Support Service. Thus, confirmation of the service tax demand on Business Support Service will not stand in judicial scrutiny - With regard to the Business Auxiliary Services, the appellant has also concedes the fact that it is not contesting the demand confirmed under Business Auxiliary Service. Therefore, the appellant is liable to pay service tax confirmed in the adjudication order with regard to that category of service - matter remanded back to the original authority for the limited purpose of quantifying the service tax demand with regard to the Business Auxiliary Service – appeal is partly allowed
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