By TIOL News Service

MUMBAI, FEB 05, 2018: THE case of the department is that appellant M/s. Hiranandani Developers Pvt. Ltd, Mumbai are having group companies namely, (i) M/s. Hiranandani Constructions Pvt. Ltd, (ii) M/s. Hiranandani Builders, (iii) M/s. Classique Associates, (iv) M/s. green Valley Developers, (v) M/s. Omega Associates, (vi) M/s. Lave View Developers, (vii) M/s. Roma Builders Pvt. Ltd and (viii) M/s. Hiranandani Properties Pvt. Ltd.

The appellants are undertaking office work of group companies and which includes accounting, administration, supervision, management, correspondence project sales, sales promotion, development, constructions, public relation, liasoning with various agencies etc.

Revenue view is that the consideration received from the group companies is liable to service tax under ‘Business Auxiliary Service'. A demand of Rs.7.83 crores was confirmed in this regard. So also, demand of Rs.4,51,138/- was confirmed under the head of Fitness services out of which demand of Rs.2,61,538- paid by the appellant was admitted and is not in challenge. Further demand of Rs.1,74,596/- was also confirmed under the head of management and maintenance or repair service

The appellant is before the CESTAT and places reliance on the following decisions in support of their contention that no service tax is payable insofar as BAS and Maintenance or Repair service -

+ M/s. Federal Bank Limited - 2013-TIOL-347-HC-KERALA-CX and 2016-TIOL-26-SC-ST.

+ Malabar Management Services Pvt. Ltd. - 2007-TIOL-1949-CESTAT-MAD

+ M/s. Sangamitra Services Agency - 2007-TIOL-1335-CESTAT-MAD, 2013-TIOL-606-HC-MAD-ST.

+ Reliance ADA Group Pvt. Ltd. - 2016-TIOL-603-CESTAT-MUM

+ M/s. Raheja Universal - 2017-TIOL-2275-CESTAT-MUM

+ M/s. Kumar Beheray Rathi - 2013-TIOL-1806-CESTAT-MUM

+ M/s. Omega Associates - 2016-TIOL-490-CESTAT-MUM.

+ M/s. Green Valley Developers - 2016-TIOL-490-CESTAT-MUM

+ M/s. Hiranandani Constructions Pvt. Ltd. - 2015-TIOL-2135-CESTAT-MUM

The AR while reiterating the findings of the impugned order submits that the group companies are distinct and independent entity and, therefore, there is relationship of service provider and service recipient.

Accordingly, the services provided by the appellant to their group companies by deputing their staff is provision of service and therefore legally taxable.

The Bench adverted to the case laws cited by the appellant and inter alia observed -

"4. … In all these cases issue was decided on the basis that any service to the group company does not amount to provision of service as per the Finance Act, 1994 on the doctrine of mutuality. To arrive at this conclusion, first, the fact whether the so-called group companies are related companies or otherwise need to be ascertained. It is necessary to ascertain the constitution of each so-called group company on the basis of share holding pattern. It is observed that the adjudicating authority has not verified such facts. This Tribunal on the identical issue in case of M/s. Perfect Circle India Ltd Vs. Commissioner in Appeal No. ST/721/12-Mum [Final Order No. A/90050/17 dated 16-6-2017] - 2017-TIOL-4001-CESTAT-MUM remanded the matter to ascertain the said fact, the order is reproduced below: …

From the above order, it can be seen that issue is more or less same and in this case also the fact of the group company as regard the share holding pattern since not verified, matter needs to be remanded back to the adjudicating authority. Accordingly, we remand the matter related to the above issue to the adjudicating authority to pass a fresh order after consideration of observations made in the above judgment of this tribunal…."

The Bench also observed that since the matter relating to the major demand is remanded, all other issues were kept open for reconsideration by the adjudicating authority.

The appeals were disposed of by way of remand.

(See 2018-TIOL-442-CESTAT-MUM)