2015 (8) TMI 157 - HC - Service Tax

Tax liability upheld for services provided to Mahindra Logistics, not subcontractor status recognized. Settlement Commission not alternative to adjudication.

The court dismissed the petition, confirming a tax liability of Rs. 31,01,599/- and interest for services provided to M/s. Mahindra Logistics Ltd. The ... Clearing and Forwarding Services - evasion of service tax - whether the appellant is subcontractor - Settlement Commission rejected the the claim made on behalf of the petitioner that the petitioner is a subcontractor of M/s.MLL and that M/s.MLL was the main contractor of M/s.AMW Ltd. - Held that:- We are in complete agreement with the view taken by the learned Settlement Commission while confirming the service tax liability of ₹ 31,01,599/- with respect to the services provided by the petitioner to M/s.MLL. It is rightly held that with respect to the service / transportation service / buses provided by the petitioner to M/s.MLL, the petitioner is liable to pay service tax on the same. The Settlement Commission has rightly held and even as observed by us hereinabove, the petitioner cannot be said to be a subcontractor for providing transportation services to M/s.AMW Ltd. There is an independent contract for providing transportation services / bus services, between the petitioner and M/s.MM / M/s.MLL and even between M/s.MM / M/s.MLL and M/s.AMW Ltd. The petitioner cannot be said to be a sub-contractor with respect to the transportation services provided to M/s.AMW Ltd. and therefore, the contention on behalf of the petitioner that M/s.MM / M/s.MLL paid service tax on the transportation services rendered to M/s.AMW Ltd. and therefore, the petitioner is not liable to pay service tax and/or the contention that there shall be double taxation if the tax is recovered from the petitioner, has no substance and the same cannot be accepted. The service tax paid by M/s.MM / M/s.MLL with respect to transportation services provided to AMW is with respect to the separate and independent contract entered into between M/s.MLL and M/s.AMW Ltd. and the services rendered by M/s.MM / M/s.MLL to M/s.AMW. The agreement / contract entered into between the petitioner and M/s.MM / M/s.MLL is an independent contract for providing services of transportation and therefore, the petitioner is not a subcontractor and therefore, the petitioner is liable to pay service tax on the transportation services / bus services provided by the petitioner to the M/s.MM / M/s.MLL. Under the circumstances, the petitioner is not entitled to any of the reliefs sought in the present petition. - Decided against the assessee. Issues Involved:1. Confirmation and imposition of tax liability of Rs. 31,01,599/- and interest thereon.2. Confirmation of whether the service tax liability on obligations subcontracted to the petitioner was discharged by the main contractor.3. Declaration of the amount due and payable by the petitioner for settling the Show Cause Notice.Issue-wise Detailed Analysis:1. Confirmation and Imposition of Tax Liability of Rs. 31,01,599/- and Interest Thereon:The petitioner challenged the order of the Customs, Central Excise, and Service Tax Settlement Commission, which confirmed a tax liability of Rs. 31,01,599/- for services provided to M/s. Mahindra Logistics Ltd. The petitioner argued that they were a subcontractor and that the main contractor, M/s. Mahindra Logistics Ltd., had already discharged the service tax liability. The court examined the agreement between the petitioner and M/s. Mahindra Logistics Ltd. and found that the petitioner had an independent contract to provide bus services, making them liable for the service tax. The court agreed with the Settlement Commission's finding that the petitioner could not be considered a subcontractor for the services provided to M/s. Asia Motor Works Ltd. and upheld the tax liability.2. Confirmation of Whether the Service Tax Liability on Obligations Subcontracted to the Petitioner was Discharged by the Main Contractor:The petitioner claimed that since M/s. Mahindra Logistics Ltd. had paid the service tax for the transportation services provided to M/s. Asia Motor Works Ltd., the petitioner should not be liable for the same tax. The court found that the petitioner provided services directly to M/s. Mahindra Logistics Ltd. and not to M/s. Asia Motor Works Ltd. The Settlement Commission had noted that there was no documentary evidence to correlate the service tax paid by M/s. Mahindra Logistics Ltd. with the services provided by the petitioner. The court upheld the Settlement Commission's view that the petitioner was independently liable for the service tax on the services provided to M/s. Mahindra Logistics Ltd.3. Declaration of the Amount Due and Payable by the Petitioner for Settling the Show Cause Notice:The petitioner sought a declaration that upon payment of Rs. 81,14,376/- with interest, the case against them should be considered settled. The court noted that the Settlement Commission had already accepted the petitioner's submission for deducting the demand of Rs. 5,45,824/- for services provided to M/s. Reliance Petrochemicals Limited in the SEZ area. However, the demand of Rs. 31,01,599/- for services provided to M/s. Mahindra Logistics Ltd. was confirmed. The court found no merit in the petitioner's argument that the Settlement Commission proceedings were an alternative to regular adjudication proceedings and upheld the Commission's decision.Conclusion:The court dismissed the petition, confirming the tax liability of Rs. 31,01,599/- and interest thereon for services provided to M/s. Mahindra Logistics Ltd. The court held that the petitioner was independently liable for the service tax and could not be considered a subcontractor for the services provided to M/s. Asia Motor Works Ltd. The court also clarified that the Settlement Commission's proceedings are not an alternative to regular adjudication but a form of conciliation for settling disputes.