The Mumbai Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that service tax is not payable on allocation of head office executive and general administrative expenses’ by the head office.
The bench of S.K. Mohanty (Judicial Member) and M.M. Parthiban (Technical Member) has observed that the sharing of expenditure cannot be treated as services and no service tax is payable.
The appellants/assessee is a banking company operating through various branch offices situated across India and having their head office in London, United Kingdom i.e., Standard Chartered Bank, UK (SCB-UK). The SCB-UK has an extensive global network of its branches all over the world including India.
The appellants provide various services to their customers such as trade services, cash management operations, utilities, loans processing, securities services, credit risk control, financial market operations and compliance & assurance, handling transaction processing activities across various product lines including credit cards, personal loans, current account and savings account, mortgage raising and corporate Finance solutions across all its domains.
In order to provide support to all its global branches SCB-UK being the head office incurs certain expenses under the various heads such as advertising, auditing fees, donations, entertainment, gross emoluments, insurance, legal professional fees, national insurance contributions, pension contributions, postage, telephone, telegraph, printing, stationery, publication, newspapers, rent & rates, subscriptions, travel expenses, machinery, furniture, computer, Microfilm, miscellaneous expenses etc. All the above expenses are termed as ‘head office executive and general administrative expenses’.
These expenses incurred by the head office of the appellants are divided proportionately across various branches situated in different countries on the basis of gross receipts of the banks functioning in the respective country. The Department had observed that the expenses incurred by the head office of the appellants SCB-UK, which is allocated to the Indian branches are for providing business support service to the appellants, and service tax is required to be discharged on the services received by the appellants under the category of ‘business support services’.
The tribunal held that ‘the allocation of head office executive and general administrative expenses’ by the head office of the appellants situated in London, UK, cannot be subjected to levy of service tax under the Finance Act, 1994.
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Case Details
Case Title: Standard Chartered Bank Versus Commissioner of CGST & CX Mumbai South
Case No.: Service Tax Appeal No. 88680 of 2018
Date: 20.01.2025
Counsel For Appellant: Shri Shambhoo Nath
Counsel For Respondent: V. Sridharan Sr. Advocate
