Service tax liability of sub-contractors, extended limitation, and penalties under Finance Act questioned; appeals admitted on legal issues.

The Bombay HC framed substantial questions of law on whether a sub-contractor remained liable to service tax despite payment by the main contractor, whether departmental circulars applicable to the relevant period could extend relief, whether the show cause notice could validly invoke the extended period under Section 73 of the Finance Act, 1994, and whether penalties under Sections 76, 77 and 78 were sustainable. The appeals were admitted on these questions of law.

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Issues: Whether the appeals raised substantial questions of law on the liability of a sub-contractor to pay service tax despite payment by the main contractor, the availability of benefit of departmental circulars for the relevant period, the sustainability of the show cause notice invoking the extended period under Section 73 of the Finance Act, 1994, and the levy of penalties under Sections 76, 77 and 78 of the Finance Act, 1994.

Outcome: The appeals were admitted on the substantial questions of law framed above.

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