2026 (3) TMI 1201 - AT - Service Tax

Body corporate service tax liability under forward charge upheld where reverse charge benefit was not proved and extended limitation applied.

A body corporate providing manpower/job-work services remained liable to discharge service tax under the forward charge mechanism where it failed to ... Liability of service tax on a body corporate providing manpower/job-work services - forward charge mechanism - entitlement to benefit under Notification No.30/2012/07/2015 or any Mega Exemption Notification - invocation of extended period of limitation in cases of deliberate tax evasion. Whether the appellant was liable to discharge the service tax on services rendered to M/s. Donypolo Udyog Ltd. during the disputed period - HELD THAT: - The Tribunal held that the appellant, a body corporate, provided taxable services (Job Work/Manpower Supply) and therefore was solely responsible for discharging 100% of the service tax on the consideration received. The notifications relied upon (Notification No.30/2012 as amended and Notification No.07/2015) do not extend an exemption or reverse-charge benefit to a body corporate service provider, and the services in question do not fall within the negative list. Consequently the demand of service tax from the appellant was sustainable. [Paras 5] The appellant was liable to discharge the service tax and the demand was correctly raised against it. Unavailability of Reverse Charge/notification benefit to a body corporate service provider - HELD THAT: - The Tribunal found that the notifications and the Mega Exemption Notification did not confer any exemption to the appellant as a body corporate. The appellant had previously paid service tax until November 2015 and could not legitimately claim a change of interpretation that would entitle it to nil returns thereafter. The claimed Chartered Accountant certificate did not provide admissible proof that the recipient discharged the appellant's liability, and the certificate lacked supporting documentary references and authority to certify for the recipient. [Paras 5] No benefit under the cited notifications or the Mega Exemption Notification was available to the appellant; the claimed certificate did not establish discharge of the appellant's liability by the recipient. Invocation of extended period of limitation in cases of deliberate tax evasion - HELD THAT:- The Tribunal concluded that the appellant intentionally stopped paying tax after November 2015 despite continuing the same activity, and there was no bona fide change in law or interpretation to justify nil returns. This intentional act of non-payment amounted to evasion of tax, thereby justifying invocation of the extended period for assessment and demand. [Paras 5] Extended period was properly invoked as the demand arose from deliberate non-payment amounting to tax evasion. Final Conclusion: The impugned demand, including invocation of the extended period, was upheld; the appeal is dismissed and the order under challenge stands affirmed. Issues: (i) Whether the appellant, a body corporate providing manpower/job-work services to M/s. Donypolo Udyog Ltd., was liable to discharge 100% service tax under the forward charge mechanism despite invoking Notification No.30/2012 and Notification No.07/2015; (ii) Whether the extended period of limitation for demanding service tax could be validly invoked against the appellant.Issue (i): Whether the appellant was liable to discharge 100% service tax under forward charge mechanism notwithstanding reliance on Notification No.30/2012 / Notification No.07/2015.Analysis: Section 66D and Section 65B(44) of the Finance Act, 1994 define taxable services and the scope of levy. Notification No.25/2012-ST (Mega Exemption) and Notification No.30/2012-ST (with amendment Notification No.07/2015-ST) address instances of liability and reverse charge. The notifications exclude bodies corporate from the benefit of reverse charge/discharge by the recipient where the service provider is a body corporate. The appellant is admitted to be a body corporate and had previously paid service tax until November 2015; thereafter it claimed nil returns relying on Notification No.07/2015-ST. Documentary evidence offered (a Chartered Accountant certificate) did not establish that the recipient, M/s. Donypolo Udyog Ltd., actually discharged the tax liability on behalf of the appellant; no supporting records from the recipient were produced. The obligation to discharge service tax collected from the recipient rests on the service provider where no exemption or applicable reverse charge benefit in favour of the provider is shown.Conclusion: Against the appellant. The appellant is liable to discharge the 100% service tax under the forward charge mechanism for the disputed period.Issue (ii): Whether the extended period of limitation could be invoked to demand service tax for the disputed period.Analysis: The appellant paid service tax until November 2015 and thereafter ceased payment despite no amendment or change in Notification No.07/2015-ST that would entitle the appellant (a body corporate) to exemption. The cessation of payment while continuing the same activity indicates intentional non-payment rather than a bona fide misunderstanding. The record does not demonstrate a valid legal basis for treating the period as outside limitation; absence of entitlement to the notification benefit and conduct indicating evasion justify invocation of the extended period.Conclusion: Against the appellant. The extended period of limitation was validly invoked.Final Conclusion: The departmental demand for service tax, interest and penalties for the period December 2015 to June 2017 is affirmed and the appeal is dismissed.Ratio Decidendi: Where a service provider is a body corporate and no valid entitlement to an exemption or reverse charge discharge by the recipient is established, the provider remains liable to discharge service tax under the forward charge mechanism; deliberate cessation of payment without legal entitlement permits invocation of the extended period of limitation.