Friday, January 8, 2016

Taking over management of business doesn't amount to 'Business Support Services'

1. Assessee entered into a contract with M/s. Kolhapur Sugar Mills Ltd. (' KSM') for manufacturing and sale of liquor in the name of KSM. It undertook the manufacturing activity as well as sale of products. KSM was allowed to use the entire infrastructure.

2. Since plant and machinery etc. were owned by KSM, it was decided that KSM would be paid Rs. 30 lakhs per annum; and balance profit (after deducting Rs. 30 lakhs) would be retained by assessee.

3. KSM was paying service tax on said amount under franchise services. Assessee booked said profit in its books as conducting charges. Department argued that 'conducting charges' received by assessee were consideration for Business Support Services and liable to service tax. Assessee filed appeal before Tribunal.