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BAS – Liability on expenses incurred for joint operation of centre


21 February, 2017

In a dispute where the assessee was managing and maintaining various facilities at the premises of IHC and receiving amounts towards expenses incurred for operation of the centre, CESTAT Delhi has rejected the contention of liability under Business Auxiliary Services.

The Revenue department here was of the view that assessee was providing Customer Care Services (inclusive of pantry, maintenance, security, housekeeping, hospitality, etc) to the occupants of the premises on behalf of their client, IHC.

Considering the agreement between the parties, and various bills, the Tribunal in the case Old World Hospitality Limited v. Commissioner, was of the view that dealings were more like co-venture agreement with joint purpose and shared income, and hence there was absence of any service provider and service recipient relationship which is liable to service tax.

It was also noted that even if there is promotion of business of facilities of IHC, the increased income was shared by both the parties, and hence it would be self-service. Period involved was from 2005-06 to 2011-2012.
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