2023 (6) TMI 954 - AT - Service Tax

Appeal dismissed, penalty reduced to 25% for Service Tax on Manpower Services.

M/s. Paritosh Ghosh Construction Pvt. Ltd. Versus Commissioner of CGST & Central Excise, Kolkata South Commissionerate

The Tribunal dismissed the appeal contesting the confirmed demand for Service Tax on Manpower Services but reduced the penalty amount imposed on the ... Levy of Service Tax - Works Contract Service undertaken for various State Government approved projects - Manpower Services - Appellant was directed to produce the copy of the Certificate issued by the Chartered Accountant which has now been produced by him - levy of penalty - HELD THAT:- Admittedly the Show Cause Notice was issued towards the Manpower Services based on the Balance Sheet figures provided by the Appellant. The confirmed demand was arrived at Rs. 25,16,900/-, after the Appellant has produced copy of the Chartered Accountant’s Certificate before the Adjudicating Authority. After considering the details given therein, the Adjudicating Authority has dropped the demand to the extent of Rs. 53.60 Lakhs and confirmed the demand only on the balance Service Tax amount of Rs.25.16 Lakhs. From the Annexure B attached to this Certificate, it is seen that the total outflow of labour charges has been divided into two parts. One part pertains to the labour charges paid to contractors and the second part pertains to labour charges paid to locally hired workers by the Company. Based on such bifurcation, the Adjudicating Authority has correctly arrived at the quantum of Service Tax applicable for the Labour Charges paid to the contractors - there are no error in the order passed by the Adjudicating Authority. Accordingly, their Appeal contesting the confirmed demand of Rs.25,16,900/- is dismissed. Penalty - HELD THAT:- The Appellant has paid entire amount of Rs.25,16,900/- after the adjudication order was passed. Therefore, the penalty is being reduced to 25% of Rs.25,16,900/- subject to the Appellant to paying interest amount along with this penalty within the 30 days from the date of receipt of this order. In case the Appellant fails to pay the interest along with 25% penalty as per this Order within 30 days from the date of receipt of this order, the earlier confirmed penalty of Rs.25,16,900/- will be recoverable from the Appellant. Appeal allowed in part. Issues Involved:The issues involved in the judgment are the demand of Service Tax on Works Contract Service and Manpower Service, dropping of certain demands by the Adjudicating Authority, contesting the penalty imposed, and reduction of penalty amount subject to payment of interest.Works Contract Service:The Appellant was issued a Show Cause Notice for providing Works Contract Service and Manpower Service. The demand for Works Contract Services was Rs.2,64,82,096. The Appellant argued that as the Works Contract Services were for State Government approved projects, no Service Tax was payable. The Adjudicating Authority dropped the demand of Rs.2,64,82,096 on account of Works Contract Service after examining the factual evidence and statutory provisions.Manpower Service:Regarding Manpower Services, the demand was for Rs.78,77,216. The Appellant contended that the total cost incurred on labor charges included direct payments to workers, payments to contractors supplying labor, and expenses for job work through workers. The Adjudicating Authority dropped the demand to the extent of Rs.53,60,316 and confirmed the demand of Rs.25,16,900 after considering the Chartered Accountant's Certificate and details provided by the Appellant.Contesting Penalty:The Appellant filed an Appeal to set aside the penalty of Rs.25,16,900. They also submitted a Miscellaneous Application contesting the Service Tax amount. The Chartered Accountant argued that the total amount in the P & L Account and Balance Sheet included various labor-related expenses, and the confirmation of Service Tax amount should be set aside. The Adjudicating Authority had considered the Chartered Accountant's Certificate and dropped a portion of the demand, leading to the penalty reduction.Judgment on Appeal:After hearing both sides and reviewing the documents, the Tribunal found that the Adjudicating Authority correctly considered the Certificate and bifurcated labor charges paid to contractors and locally hired workers. The Appeal contesting the confirmed demand of Rs.25,16,900 was dismissed. The penalty imposed was reduced to 25% of the demand amount, subject to payment of interest within 30 days from the date of the order. Failure to pay the interest and penalty within the specified time would result in the earlier penalty amount being recoverable from the Appellant.Decision and Conclusion:In conclusion, the Tribunal partly allowed the Appeal by dismissing the contestation of the confirmed demand for Service Tax on Manpower Services but reducing the penalty amount. The Appellant was directed to pay the reduced penalty along with interest within the stipulated timeframe to avoid the recovery of the original penalty amount.