SUB CONTRACTOR RECEIVED SCN FOR NON PAYMENT OF SERVICE TAX

[javed bhakhrani]

ONE OF MY CLIENT RECEIVED SCN CONTAINING AS A SUB CONTRACTOR PAYMENT RECEIVED FROM PRINCIPAL CONTRACTOR FOR CONSTRUCTION OF PETROL PUMP WORK INCLUDE 10% OF MATERIALS AND 90% IS MAN POWER. I WANT TO KNOW HOW I REPLY SCN WITH CASE LAWS.

[Shilpi Jain]

If its a for payment of service tax, is it not time barred?

[KASTURI SETHI]

Pl. elaborate your query.

[javed bhakhrani]

ACTUALLY ONE OF CLIENT RECEIVED SCN INCLUDING PROVIDING CONSTRUCTION SERVICES TO PRINCIPAL CONTRACTOR FOR MAKING PETROL PUMP WORK, I WANT TO KNOW ANY REMEDIES AVILABLE TO US FOR OFFICER CAN DROP OUT PROCEEDING OF THIS MATTER, ANY CASE LAWS RELATING TO THAT FOR OFFICER DROP OUT PROCEDING AND CLIENT DONT WANT TO PAY TAX

[KASTURI SETHI]

Dear Javed Bhakhrani,

Any agreement executed between main contractor and sub-contractor ? ? Pl. confirm.

[javed bhakhrani]

NOT HAVE ANY CONTRACT BETWEEN TWO PARTIES IN WRITTEN

[KASTURI SETHI]

Then what is documentary evidence to the effect that your client was sub-contractor during the relevant period ?

[javed bhakhrani]

NO DOCUMENTARY EVIDANCE EXISTS

[KASTURI SETHI]

If it is so, how the experts can give fool-proof advice ? There must be some solid basis to get the case dropped.

[javed bhakhrani]

NOT FOOL PROOFED BUT SOME CASE LAW WE WANT FOR UPTO SOME POSSIBLE EXTENT OFFICER MAY DROP

[KASTURI SETHI]

You will get case laws.First let me know what is the actual issue involved.

Has the client raised any bill/invoice in the name of main contractor ? If so, post the description of service/other details mentioned in the bill/invoice.It appears to me two issues are involved.

[javed bhakhrani]

Client issued invoice that time but currently Dont have any copies of invoices

[Amit Agrawal]

I would suggest you to consult an expert who will go through entire case and help you prepare arguments on merits and limitations.

With limited facts without any supporting documents, without knowing charges made in the SCN and without knowing about limitation aspect etc., it is not possible to give any meaningful suggestion or case-laws in my humble view.

[KASTURI SETHI]

Dear Javed Bhakhrani,

The following case laws are in your favour:-

1.Demand on the basis of 26AS/TDS is not sustainable --CESTAT Ahmedabad in the case of Forward Resources (P) Ltd. Vs. CCE & ST - 2022 (7) TMI 716 - CESTAT AHMEDABAD.

2. If sub-contractor pays ST, main contractor will take Cenvat Credit. Situation is revenue neutral---CESTAT Delhi in the case of Babu Lal Gurjar Vs. CCE, Jodhpur - 2022 (11) TMI 950 - CESTAT NEW DELHI and in the case of RPP Infra Project Ltd. Vs. CCE, Salem - 2022 (10) TMI 582 - CESTAT CHENNAI.

All the above case laws can be traced on google.

[PN ELAMPARRUTHY]

@- KASTURI SETHI

SIR WE RECEIVED A NOTICE IN SERVICE TAX FOR MAN POWER SUPPLY TO MANUFACTURING COMPANY... IF SERVICE RECEIVED BY AN COMPANY THEN RCM APPLICABLE ? as per notification 15/2015 service tax is it correct sir...

[KASTURI SETHI]

Dear Querist,

You should post independent query against new Issue ID. You will get many opinions on the issue from the experts..

[KASTURI SETHI]

Dear Javed Bhakhrani,

Feel free to ask any cross-query on this issue but full and true facts must be disclosed in order to get correct and concrete reply. It would be in the interest of your client.

Pl. note that I agree with the views of Sh.Amit Agrawal, Sir. So come on with true picture and full details.

[Shilpi Jain]

Also note, mere quoting of a case law may not lead to dropping of demand. So as suggested by other experts pls take professional consultation in this regard.

[KASTURI SETHI]

Yes, Madam. How to fit any case law in the reply to SCN is virtually the art of drafting which cannot be taught here. SUCH drafting is the result of one's education, experience, practice, talent etc.

[THYAGARAJAN KALYANASUNDARAM]

Dear Sir,

As per my understanding of your case, you are the sub-contractor of main contractor by providing construction service. Please check mega exemption Notification no.25/2012 dated 20.06.2012 serial no.29(h) is fully exempted.

[KASTURI SETHI]

Yes but exempted only if service provided by the sub-contractor is actually Works Contract Service. On this issue, the department has so many legal arrows in its armoury.

AI Summary

Service tax liability for subcontractors may be challenged by contesting limitation, evidentiary basis, and invoking exemption or neutrality. Subcontractor received an SCN for non-payment of service tax for construction work; core issues are characterization as taxable service, lack of documentary proof of subcontracting, and potential time bar. Defenses include contesting limitation, disputing demands based solely on third party tax records, invoking revenue neutrality where subcontractor payment leads to credit for main contractor, and asserting Works Contract Service exemption if supported by facts. Experts advise producing invoices/agreements and obtaining specialized drafting and review; mere case citations without matching facts are unlikely to succeed.