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 establish a valid entitlement to reverse charge or exemption under the cited notifications. The record did not show that the recipient had discharged the tax on its behalf, and a chartered accountant's certificate was insufficient without supporting recipient records. The cessation of tax payment after November 2015, despite no material change in the notification framework, supported invocation of the extended period of limitation. The demand for service tax, interest and penalties for December 2015 to June 2017 was therefore sustained.

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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.

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