TaxTMI 
TaxTMI 
TaxTMI 
2016 (2) TMI 810
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....rein entered into contracts with the Food Corporation of India(FCI) which is admittedly a Government Corporation for transportation of food grains, sugars and other food materials. 3. Briefly stated the case of the petitioner is that the liability to pay service tax on the services provided by the petitioners of providing goods transport services etc. lies upon the assessee which is the service receiver and not the service provider and, therefore, the FCI has wrongly deducted the service tax from the contractual amount and the same should be ordered to be refunded to the petitioners. 4. The stand of the FCI is that in terms of the agreement entered into between the parties, the contractor has undertaken to pay these liabilities and under ....
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....n 66 spoke of the liability to pay tax in respect of services "which are provided to any person by the person responsible for collecting the service tax" and Section 65(5) defined "assessee" as meaning "a person responsible for collecting the service tax", that this Court held that sub-clauses (xii) and (xvii) of Rule 2(1) (d) of the Service Tax Rules were illegal. 21. As is apparent from Section 116 of the Finance Act, 2000, all the material portions of the two sections which were found to be incompatible with the Service Tax Rules were themselves amended so that now in the body of the Act by virtue of the amendment to the word "assessee" in Section 65(5) and the amendment to Section 66(3), the liability to pay the tax is not on the pers....
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....by ceased to be relevant for the purposes of construing the present provisions (vide Ujagar Prints (II) vs. Union of India) . Therefore subject to our decision on the question of the legislative competence of Parliament to enact the law, and assuming the amendments in 2003 to be legal for the time being, we reject the submission of the writ petitioners that by the amendments brought about by Sections 116 and 117 of the Finance Act 2000, the decision in Laghu Udhyog Bharati has been legislatively overruled." A bare reading of this judgment leaves no manner of doubt that the liability to pay tax is of the Food Corporation of India. 7. Reference may also be made in this behalf to the judgment of the Apex Court in Rashtriya Ispat Nigam Ltd. V....
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....tainly enter into a contract to shift its liability of service tax. Though the appellant became the assessee due to amendment of 2000, his position is exactly the same as in respect of Sales Tax, where the seller is the assessee, and is liable to pay Sales Tax to the tax authorities, but it is open to the seller, under his contract with the buyer, to recover the Sales Tax from the buyer, and to pass on the tax burden to him. Therefore, though there is no difficulty in accepting that after the amendment of 2000 the liability to pay the service tax is on the appellant as the assessee, the liability arose out of the services rendered by the respondent to the appellant, and that too prior to this amendment when the liability was on the service ....
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....of the tax liability arising out of his obligations under the contract. 28. It was pointed out on behalf of the appellant that it is conventional and accepted commercial practice to shift such liability to the contractor. A similar clause was considered by this Court in the case of Numaligarh Refinery Ltd. vs. Daelim Industrial Co. Ltd., reported in [2007 (8) SCC 466]. In that matter, the question was as to whether the contractor was liable to pay and bear the countervailing duty on the imports though this duty came into force subsequent to the relevant contract. The relevant clause 2(b) read as follows: "2(b) All taxes and duties in respect of job mentioned in the aforesaid contracts shall be the entire responsibility of the contract....
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.... Interpreting this clause along with the other clauses the Apex Court held that the liability to pay taxes had been shifted from the assessee to the other party. 10. Therefore, the only issue which requires consideration in this case is, with regard to the interpretation of the note quoted hereinabove. If this note was not there then the FCI would definitely be liable to pay the tax. The question is what is the effect of this note. 11. In our opinion, the note as incorporated clearly indicates the intention of the parties that the rate to be quoted by the contractor should be inclusive of all taxes, levies, cesses etc. which would obviously include service tax. The contractor cannot be heard to urge that service tax is not part of the tax....