2025-VIL-1894-CESTAT-CHD-ST
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SERVICE TAX CESTAT Cases

Service Tax - Cost Sharing Among Group Companies - The appellant reimbursed expenses to its foreign group company for their share of expenses for events/conferences held outside India – Demand of service tax under Business support services on the reimbursement - Whether the sharing of expenses among group companies amounts to provision of service under BSS - HELD - The appellant had reimbursed expenses to its group company abroad for their share of the expenses for various events held outside India and the said expenses have been shared on cost-to-cost basis. In the present case, the expenses are shared for common benefit of all and no service has been provided by one entity to another entity. There is no provision of service at all in this arrangement, therefore, the same are not liable to service tax - The sharing of expenses between group companies does not result into provision of any service and hence no service tax is payable - The demand of service tax on the cost sharing among group companies is set aside and the appeal is allowed - Reimbursement of Expenses - The appellant reimbursed the expenses to its foreign group company - Whether the reimbursement of expenses can be considered as a 'consideration' for providing the service - HELD - The reimbursement made by the appellant cannot be regarded as consideration flowing from the appellant towards the foreign entities, rather the same is towards the reimbursement of cost incurred for organizing the events. Such reimbursement by the appellant is not a consideration in lieu of receiving any service from its associated enterprises. The confirmation of demand by including reimbursable expenses in taxable value is not sustainable - Business Support Services - The scope of Business Support Services was clarified vide Circular No. 334/4/2006-TRU dated 28.02.2006 which clarified that the purpose behind the business support service was to tax all such outsourced services that are required by business entities in their business or commerce. In the present case, there is no outsourcing of any services, therefore, the demand under business support service is not sustainable. The department failed to establish how the arrangement between the appellant and the foreign entities falls within the meaning of "operational or administrative assistance in any manner" - The appellant did not receive any services in the form of BSS till 30.06.2012 - Revenue Neutral - The entire exercise is revenue neutral because even if the appellant is liable to pay service tax, it would be entitled to avail the cenvat credit of service tax paid and can utilize the same for paying service tax on the taxable output services provided by the appellant - Invocation of Extended Period - When the demand is proposed on the basis of an audit, the extended period of limitation cannot be invoked as the department had all the facts in its knowledge.
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