Case nº Order No. AAR/05(ST)/2006 in Application No. AAR/09/ST/2006 of Authority for Advance Rulings, November 09, 2006 (case IJM (India) Infrastructure Limited Vs Commissioner of Service Tax)

JudgeFor Appellant: Surender Gupta, C.A. and For Respondents: A.K. Roy, Joint CDR and Bipin Sapra, Additional Commissioner Service Tax
PresidentSyed Shah Mohammed Quadri, J. (Chairman) and B.A. Agrawal, Member
Resolution DateNovember 09, 2006


(Central Excise, Customs And Service Tax)

Syed Shah Mohammed Quadri, J. (Chairman)

  1. The applicant, in this application under Section 96C of the Finance Act, 1994 (referred to in this order as "the Service Tax Act"), claims to be a wholly owned subsidiary of M/s IJM Corporation, Berhad, a foreign company incorporated in Malaysia (for short "the holding company"). It is stated that the holding company is having 97.31% of paid up equity of the applicant. The holding company was awarded the contract of Civic Centre construction work at Jawahar Lal Nehru Marg, Minto Road, New Delhi by the Municipal Corporation of Delhi (MCD). The holding company has sub-contracted the work of Civic Centre construction to the applicant. In the application against column 6, it is stated that the construction work is in progress. On these facts, the applicant seeks advance ruling of the Authority on the following question:

    Whether the Civic Centre Construction Work awarded by the MCD is liable to service tax under Section 65(105)(zzq) read with Section 65(25b) of the Chapter V of Finance Act, 1994

  2. On the scrutiny of the application, the Secretariat of the Authority pointed out the following defects in the application:

    (i) the applicant is not a wholly owned subsidiary Indian company within the meaning of Section 96A(b) of the Service Tax Act; and

    (ii) the service in relation to which an advance ruling is sought has already commenced.

    On 18.10.2006 a show cause notice was therefore issued to the applicant to explain as to why the application should not be rejected on the aforementioned grounds.

    No reply to the notice is filed by the applicant. The case is put up for orders before us today.

  3. Mr. Surender Gupta, learned Counsel, appears for the applicant and argues that the expression "wholly owned subsidiary Indian company" is not defined either in the Service Tax Act or in the Indian Companies Act and that it is an impossibility because no company can be registered in India without at least one Indian shareholder and therefore one or more shares ought to be allotted to an Indian. In this case the Indian share holders are having 2.69% shares and the holding company is having 97.31% shares in the applicant. He prays that in the circumstances the applicant be treated as wholly owned subsidiary. Mr. Bipin Sapra, Additional Commissioner, Service Tax, who appears for the Commissioner contends that though at least one Indian shareholder has to be there in...

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