2018 (9) TMI 1503 - AT - Service Tax

Appellate Tribunal Remands Case for Tax Verification, Upholds Demand Confirmation

The Appellate Tribunal CESTAT ALLAHABAD allowed the appeal by remanding the case for verification of the principal contractor's tax payment. The ... Liability of Service Tax - Sub-contract - appellant has provided services of fabrication of Iron and Steel items to their principal contractor - who is liable to pay tax, principal contractor or the appellant, sub-contractor? Held that:- In the case of M/s R.S. and Brothers [2018 (6) TMI 1530 - CESTAT ALLAHABAD] has held that where the principal contractor, for whom the sub-contractor was working, has already discharged full tax liability on the full value of the contract, no further liability would be fastened against the sub-contractor - However, we find that the plea that principal contractor has discharged the full tax liability, was not raised before the Original Adjudicating Authority and as such was not verified - matter requires reconsideration - appeal allowed by way of remand. Issues:Demand confirmation of service tax, imposition of penalties under various Acts, rejection of declaration under Voluntary Compliance Encouragement Scheme-2013, sub-contractor's liability for service tax payment, remand for verification of principal contractor's tax liability.Analysis:The judgment by the Appellate Tribunal CESTAT ALLAHABAD addresses the issue of confirming a demand of &8377; 74,59,373 along with penalties on the appellant for providing services of fabrication of Iron and Steel items to their principal contractor. The demand was upheld by rejecting the appellant's declaration under the Voluntary Compliance Encouragement Scheme-2013, where they declared unpaid Service Tax of around &8377; 15,11,402. The appellant, represented by a Chartered Accountant, argued that no tax liability should be imposed as their principal contractor had already paid the service tax on the full value of the contract. However, this contention was not raised before the Commissioner, leading to the need for remand to establish the fact of the principal contractor's tax payment.The Tribunal referred to previous decisions, such as M/s R.S. and Brothers, which held that if the principal contractor has discharged the full tax liability on the contract, the sub-contractor should not be held liable again. Despite this, as the plea regarding the principal contractor's tax liability was not raised before the Original Adjudicating Authority, the Tribunal set aside the impugned order and remanded the matter for verification. The decision to remand was based on the need to verify the factual aspects regarding the principal contractor's tax payment before determining the appellant's duty liability.In conclusion, the appeal was allowed by way of remand, and the Miscellaneous Application for additional evidence was also disposed of. The judgment emphasizes the importance of verifying the principal contractor's tax liability before imposing service tax demands on the sub-contractor, highlighting the need for proper factual verification in such cases to ensure fair adjudication.