Reverse charge service tax depends on actual service-recipient relationship; project funding and later use do not create liability.

Reverse charge service tax liability depends on the actual service-provider and service-recipient relationship under section 68(1) of the Finance Act and Notification No. 30/2012-ST. Where a contractor was engaged directly by the Tripura Housing and Construction Board and rendered works contract services only to that Board, the appellant, as the eventual user and project funder, was not the recipient of the service. The absence of any direct contractual nexus between the appellant and the contractor meant reverse charge could not be fastened on the appellant. On those facts, the demand and the order confirming liability against the appellant could not be sustained.

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Issues: Whether the appellant, as the ultimate user of the building, was liable under reverse charge to pay the balance service tax on the works contract executed by a contractor engaged by the Tripura Housing and Construction Board.

Analysis: The service tax liability under reverse charge depended on the actual service-provider and service-recipient relationship. The construction contractor was engaged directly by the Tripura Housing and Construction Board, and the contractor rendered services to that Board alone. The appellant had not engaged the contractor, and no direct contractual relationship existed between the appellant and the contractor. The fact that the appellant funded the project and later used the building did not make it the recipient of the contractor's service. The statutory scheme under section 68(1) of the Finance Act and Notification No. 30/2012-ST split liability between the actual service provider and recipient, which on the facts were the contractor and the Board, not the appellant.

Conclusion: The appellant was not liable to discharge the impugned service tax under reverse charge, and the demand and appellate order fastening liability on the appellant could not be sustained.

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