Service tax treatment where partner's PAN payment offsets firm liability and subcontractor remains independently liable; remand for computation.

Payment of service tax made using a partner's PAN/registration may be credited against the partnership firm's service-tax liability; this adjustment is permitted while any separate tax due for services the partner rendered personally must still be accounted for. A subcontractor remains independently liable to discharge service tax even if the main contractor has paid tax on the overarching transaction; accordingly, demands premised on subcontractor receipts are sustained. Claims for abatement and the precise computation of liability for works contract and transportation receipts require documentary verification, and those computation issues are remitted to the original authority for fresh adjudication and reconciliation of records.

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Issues: (i) Whether service tax paid using a partner's service-tax registration/PAN can be treated as payment towards the partnership firm's liability. (ii) Computation and correctness of service tax liability on Works Contract Service and Transportation of Goods including claims of abatement and sub-contractor liability.

Issue (i): Whether service tax paid using the partner Shri K. S. Nair's service-tax registration/PAN may be adjusted against the partnership firm's liability.

Analysis: The Tribunal examined statutory provisions concerning registration based on PAN and partnership principles. It considered authorities holding that payments made by a partner can be relevant to the firm's liability and noted prior decisions permitting adjustment where tax has been paid though under a partner's registration. The Tribunal also observed that any tax liability of the partner for services he rendered separately must be accounted for.

Conclusion: Payment of service tax under the partner's PAN is to be allowed and adjusted against the appellant firm's liability.

Issue (ii): Whether the demand for service tax on amounts characterized as Works Contract Service and Transportation of Goods is sustainable, including abatement claims and the appellant's contention of being a subcontractor for which main contractor paid tax.

Analysis: The Tribunal reviewed the factual record, the lack of documentary support for certain receipts (Transportation) and the legal position on subcontractor liability. It applied precedent holding that a sub-contractor remains liable to pay service tax even if the main contractor has discharged tax on the overall transaction. The Tribunal found that documents submitted warrant further custodial examination for abatement and reconciliation, necessitating remand to the adjudicating authority for re-computation and opportunity to produce evidence.

Conclusion: The demand insofar as it arises from services rendered by the appellant as a sub-contractor is upheld; the computation of demand relating to Works Contract and Transportation receipts is remanded to the original authority for fresh consideration on the basis of documents to be produced by the appellant.

Final Conclusion: The appeal is partly allowed by permitting adjustment of tax paid under the partner's PAN against the firm's liability, while upholding the liability of the appellant as sub-contractor; computation issues are remitted for fresh adjudication.

Ratio Decidendi: Where a partner has paid service tax using his PAN/registration for services rendered by the partnership, such payment can be adjusted against the partnership firm's liability, but a sub-contractor remains independently liable to discharge service tax even if the main contractor has paid tax on the transaction; computation disputes and entitlement to abatement require remand for documentary verification.

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