service tax on common intercom system by group company

2536 views 3 replies

Dear sir

we have various group companies sitting in common area and using common intercom system but holding company paying bills for telephone line taken in its name on monthly bills issued by telephon company(BSNL) .Now this company issues debit note to its group companies which uses intercom facility. my question is whether service tax apllicable???

if applicable,then under which category either Business support service or Telephone service or any other ????

 

Replies (3)
Sharing of expenses among group companies/entities are general practices. Such sharing of expenses is done by issuing debit note on other group company. In this transaction there is no service rendered by one group company to another group company, it is merely an allocation of expenses out of common pool. As the service tax paid on such service is already paid by the corporate office, now again on sharing of such expenses cannot attract service tax again. Kindly note that cost incurred on staff and shared by group companies’ fall under the Business Auxiliary Services. In the case of Glaxo Smithline Pharmaceuticals Ltd V Commissioner of Central Excise (2005–TOIL-688-CESTATE), it was held that cost incurred on staff and shared by staff fall under Business Auxiliary Services. The other thing which comes to mind is that the HO should get itself registered as Input Service Distributor
Sharing of expenses among group companies/entities are general practices. Such sharing of expenses is done by issuing debit note on other group company. In this transaction there is no service rendered by one group company to another group company, it is merely an allocation of expenses out of common pool. As the service tax paid on such service is already paid by the corporate office, now again on sharing of such expenses cannot attract service tax again. Kindly note that cost incurred on staff and shared by group companies’ fall under the Business Auxiliary Services. In the case of Glaxo Smithline Pharmaceuticals Ltd V Commissioner of Central Excise (2005–TOIL-688-CESTATE), it was held that cost incurred on staff and shared by staff fall under Business Auxiliary Services. The other thing which comes to mind is that the HO should get itself registered as Input Service Distributor

Thanks . But what about CENVAT Credit ? If "A" has incurred some service , can it take the whole of input credit even if it has passed on some part of exp. as allocatable to "B" without raising serv.tax thereon.

 Originally posted by :Pritam

" Sharing of expenses among group companies/entities are general practices. Such sharing of expenses is done by issuing debit note on other group company. In this transaction there is no service rendered by one group company to another group company, it is merely an allocation of expenses out of common pool. As the service tax paid on such service is already paid by the corporate office, now again on sharing of such expenses cannot attract service tax again.

Kindly note that cost incurred on staff and shared by group companies’ fall under the Business Auxiliary Services. In the case of Glaxo Smithline Pharmaceuticals Ltd V Commissioner of Central Excise (2005–TOIL-688-CESTATE), it was held that cost incurred on staff and shared by staff fall under Business Auxiliary Services.

The other thing which comes to mind is that the HO should get itself registered as Input Service Distributor
"


 

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
16 June 2026
Sr. Associate / Assistant Manager | TAS / FDD

Boutique Investment Bank & Transaction Advisory Firm

Gurgaon

CA

View Details
Company
ARTICLESHIP 27 June 2026
Article

SNCO

Mumbai

CA Inter

View Details
Company
ARTICLESHIP 09 June 2026
Article Trainee

Numbertree LLP

Mumbai

CA Inter

View Details
Company
ARTICLESHIP 18 June 2026
Article Assistance

RB KESHRI & CO.

Mumbai

CA Inter

View Details
Company
25 June 2026
AUDIT MANAGER

JDAS & ASSOCIATES

New Delhi

CA

View Details
Company
10 June 2026
Senior Account Executive

JDS Advisory LLP

Ahmedabad

CA Inter

View Details
Company
22 June 2026
Accountant

Global Image Technologies Private Limited

New Delhi

MBA

View Details
Company
12 June 2026
Accounts & Taxation Executive

Winshine Financial Services

Mumbai

CA Inter

View Details