Service provider liable for tax under Finance Act despite non-payment; court upholds order.

The court held that the petitioner, as a service provider, is liable to pay tax under the Finance Act, 1994, regardless of non-receipt of payment from the service recipient. The court emphasized the mandatory requirement for service providers to register, pay applicable service tax, and file returns. The court also found the order dated 02.04.2018 to be legal and correct, rejecting the petitioner's defense of non-receipt of payment. The petition was disposed of, upholding the impugned order and affirming the petitioner's liability to pay tax under the Act.

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Issues Involved:
1. Liability of the petitioner to pay tax under the Finance Act, 1994 for services rendered.
2. Whether non-receipt of payment from the service recipient can be a defense for non-compliance with statutory provisions.
3. Appropriateness of filing an appeal under Section 85 of the Act.
4. Legality and correctness of the order dated 02.04.2018 passed by the Joint Commissioner, CGST & Central Excise Patna-I.

Issue-wise Analysis:

1. Liability of the Petitioner to Pay Tax:
The court examined whether the petitioner, as a service provider, is liable to pay tax under Chapters V and VA of the Finance Act, 1994. The court referred to Sections 65, 66, 66B, 66D, 68, 69, 71A, 72, 72A, 73, 75, and 76 of the Act, which collectively mandate that every service provider must register, pay the applicable service tax, and file returns. The court emphasized that the statutory language is clear and unambiguous, stating that the service provider is mandatorily required to register and make payment of the tax component for services rendered.

2. Non-receipt of Payment as a Defense:
The court addressed whether non-receipt of payment from the recipient of the services can be used as a defense for non-compliance with statutory provisions. The court held that the liability to pay tax is not subject to the receipt of payment from the service recipient. The statutory provisions mandate timely payment of the tax component, and there is no provision for deferment until receipt of payment. The court cited several judgments, including Laghu Udyog Bharati and another Vs. Union of India and others, T. N. Kalyana Mandapam Assn. Vs. Union of India & others, and Gujarat Ambuja Cements Ltd. and another Vs. Union of India and another, which affirm that the service provider is responsible for paying the service tax.

3. Appropriateness of Filing an Appeal:
The court considered whether the petitioner should have preferred an appeal under Section 85 of the Act, challenging the order(s) of the appropriate authority. The court noted that the Act provides a complete mechanism for adjudication of all issues of fact or law before different forums, and errors both of fact and law can be corrected by such statutory authorities. However, given that the matter pertains to the year 2011-12, the court decided not to relegate the petitioner to exhaust such remedies and chose to decide the issue on merits.

4. Legality and Correctness of the Order Dated 02.04.2018:
The court examined the legality and correctness of the order dated 02.04.2018 passed by the Joint Commissioner, CGST & Central Excise Patna-I. The court found that the impugned order was passed after affording an opportunity for filing a response, considering all contentions, and providing a fair hearing. The order assigned reasons for assessing the liability, correctly appreciated and applied statutory provisions, and did not violate principles of natural justice. The court concluded that the order was not perverse, illegal, or erroneous, and the petitioner's defense of non-receipt of payment from the Railways was rightly rejected by the Assessing Authority.

Conclusion:
The court answered the questions as follows:
(a) The liability to pay tax under the Finance Act, 1994 rests solely upon the petitioner, being the service provider.
(b) Such liability cannot be deferred and is not subject to receipt of any amount from the service recipient.
(c) Failure on the part of the service recipient to pay the amount cannot be a sufficient reason for non-compliance with statutory provisions by the service provider, nor can it be set up as a defense in adjudicatory proceedings.
(d) The Act provides a complete mechanism for adjudication of all issues of fact or law before different forums.

The petition was disposed of, and the impugned order dated 02.04.2018 was upheld.

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