2025-VIL-1505-CESTAT-CHE-ST
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SERVICE TAX CESTAT Cases

Service Tax - Cost Sharing Arrangement, Demand under Reverse Charge Mechanism, Extended Period of Limitation - The appellant is a subsidiary of M/s. General Physics Corporation, USA (GPC) - GPC raised invoices on the Appellant for consulting services rendered by GPC to Appellant - Whether the appellant is liable to pay service tax on the cost sharing arrangement entered with the group companies towards operational cost, administrative expenses and other miscellaneous expenses - HELD - The services incurred can be categorized as cost sharing or operational or administrative assistance for the period in question which has already been settled in various decisions of the Tribunal - The Tribunal, relying on various judicial precedents, held that the services incurred can be categorized as cost sharing or operational or administrative assistance, which are not subject to service tax until the amendment made effective from 01.05.2011 - The essence of the agreement was to share expenses incurred by the group as a whole, and not for any specific services - Accordingly, the demand for service tax cannot be sustained for the period prior to 01.05.2011 - the impugned order is set aside on merits as well as on the ground of limitation – The appeal is allowed - Whether the extended period of limitation can be invoked in the facts of the present case - HELD - The activity was revenue neutral, as the tax paid would have been available as CENVAT credit to the appellant - The Tribunal held that in cases where the situation is revenue neutral, there is no justification for invoking the extended period of limitation and for imposing penalties.
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