Service tax liability stays with the provider despite non-payment by the recipient and cannot be defeated by private disputes.

Service tax liability under the Finance Act, 1994 rests on the service provider for taxable services, unless the service is excluded by the negative list or a specific statutory shift applies. Non-receipt of payment from the recipient does not defer or defeat that liability, because tax obligations arise under the statute and not from private payment disputes. Failure of the recipient to pay is not a valid defence to non-compliance with registration, payment, or related statutory duties. The adjudication order was found to be reasoned, procedurally fair, and free from perversity or legal error, so the demand, interest, and penalties were sustained.

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Issues: (i) Whether the petitioner, as a service provider, was liable to pay service tax on the services rendered; (ii) whether non-receipt of payment from the service recipient could defer or defeat the statutory liability; (iii) whether failure of the service recipient to pay could be a defence to non-compliance by the service provider; (iv) whether the impugned adjudication order was perverse, illegal, or erroneous warranting interference.

Issue (i): Whether the petitioner, as a service provider, was liable to pay service tax on the services rendered.

Analysis: The statutory scheme under Chapter V and VA of the Finance Act, 1994 makes service tax chargeable on taxable services and places the obligation to register, assess, and pay on the person providing the taxable service, unless the service falls within the negative list or the statute shifts the liability by notification. The service rendered by the petitioner did not fall in the negative list, and the petitioner had received consideration for the work executed.

Conclusion: The liability to pay service tax rested solely on the petitioner as the service provider.

Issue (ii): Whether non-receipt of payment from the service recipient could defer or defeat the statutory liability.

Analysis: The Act does not make payment of service tax contingent upon actual receipt of the amount from the service recipient. The charging and collection provisions, together with the provisions relating to registration, returns, assessment, interest, and penalty, indicate that tax becomes payable according to the statute and not according to the private payment disputes between the contracting parties.

Conclusion: The statutory liability could not be deferred on the ground of non-receipt of payment from the service recipient.

Issue (iii): Whether failure of the service recipient to pay could be a defence to non-compliance by the service provider.

Analysis: Contractual disputes or arbitration between the parties govern inter se rights and obligations, but they do not suspend compliance with fiscal obligations under the statute. Non-payment by the recipient is not a legally sufficient defence to evade registration, payment, or other statutory duties imposed on the service provider.

Conclusion: Failure of the service recipient to pay was not a valid defence to the petitioner's statutory default.

Issue (iv): Whether the impugned adjudication order was perverse, illegal, or erroneous warranting interference.

Analysis: The adjudicating authority had issued notice, afforded hearing, considered the response, and recorded reasons while determining liability. The order applied the statutory provisions correctly, the service was taxable, the demand and consequential interest and penalty were based on the materials on record, and there was no violation of natural justice or misapplication of law.

Conclusion: The impugned order did not suffer from perversity, illegality, or error warranting interference.

Final Conclusion: The petition failed on merits and the demand, interest, and penalties confirmed under the service tax framework were sustained.

Ratio Decidendi: Under the service tax regime, liability to register and pay tax rests on the service provider, and such liability is not postponed or defeated by non-receipt of consideration from the recipient or by private contractual disputes.

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