Reverse charge on rent-a-cab service barred a second tax demand and unsupported suppression-based penalties against the provider.

When service tax on rent-a-cab service stood shifted to the recipient under reverse charge, and the recipient had already paid the tax, a second demand against the provider was unsustainable because the same liability cannot be recovered twice. The tribunal also held that no ST-3 return filing obligation survived for the provider during the disputed period once it was no longer liable to pay the tax, and third-party data alone did not establish suppression or mala fide conduct. On that basis, the tax demand, extended-period allegation, and penalty were set aside.

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Issues: (i) Whether service tax demand could be sustained when, under Notification No. 30/2012, the tax on rent-a-cab service was payable by the recipient under reverse charge and the recipient had already paid the tax. (ii) Whether the penalties and invocation of suppression could be sustained when the appellant did not file ST-3 returns after the liability shifted to the recipient and the demand was founded on third-party data.

Issue (i): Whether service tax demand could be sustained when, under Notification No. 30/2012, the tax on rent-a-cab service was payable by the recipient under reverse charge and the recipient had already paid the tax.

Analysis: The admitted facts showed that the appellant was engaged in rent-a-cab operator service and that, after Notification No. 30/2012, the service recipient was liable to discharge the tax under reverse charge mechanism. The recipient's certificate stated that the entire service tax for the relevant period had already been paid. The contract and invoice materials did not justify a second levy against the appellant once the tax stood discharged by the recipient. The principle against double recovery of the same tax was applied.

Conclusion: The demand of service tax was not sustainable and was set aside.

Issue (ii): Whether the penalties and invocation of suppression could be sustained when the appellant did not file ST-3 returns after the liability shifted to the recipient and the demand was founded on third-party data.

Analysis: Since the appellant was no longer liable to pay the tax, it was not required to file ST-3 returns for the disputed period under Section 70 of the Finance Act, 1994. The demand was based on information from third-party tax data, which by itself was insufficient to confirm liability. No suppression or mala fide conduct was proved to justify extended-period action, and the penalty under Section 77 of the Finance Act, 1994 could not survive independently.

Conclusion: The penalties and the allegation of suppression were not sustainable.

Final Conclusion: The tax liability had already been discharged by the recipient under reverse charge, and the consequential demand and penalties against the appellant could not stand.

Ratio Decidendi: Where tax on a service is statutorily shifted to the recipient under reverse charge and the recipient has already discharged that liability, the provider cannot be called upon to pay the same tax again, and penalties based on non-liability and unproved suppression cannot be sustained.

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