TaxTMI 
TaxTMI 
2017 (11) TMI 300
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....n contractor has paid service tax, the same cannot be demanded from the sub-contractor. 2.1 Ld. Counsel further argued that part of the service was provided within the Special Economic Zone (SEZ) and no service tax can be levied on such services. He argued that this point was not taken before the Commissioner, however this being a legal point can be raised at Tribunal stage. He further argued that the Commissioner has examined only one contract and based on his findings only one contract. He argued that the Commissioner should have examined all contracts individually to come to any findings. He however did not specify as to what is the difference between this contract and others, and how that would be relevant. 2.2 Ld. Counsel further argued that the services provided by them is not erection, commissioning and installation but manpower supply service. He however could not give any evidence to support the said assertion. Ld. Counsel further argued that the benefit of Notification No.1/2006-ST dated 01/03/2006 has been denied. He particularly pointed out the para 12.3 of the impugned order where according to him the benefit of Notification No.19/2003 and 01/2006-ST has been denied ....
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....3.2 Ld. AR further argued that revenue neutrality cannot be pleaded at this stage when short levy has been detected during audit or investigation. He further argued that there was no revenue neutrality as the credit of this tax was not available to the main contractor if he availed benefit of notifications 19/2003-ST and 01/2006-ST. 4. We have gone through the rival submissions. 4.1 The first issue that we examine is if there will be a revenue loss to government or this is a revenue neutral situation. The main contractor is involved in Erection Commissioning and Installation service. In respect of this service the tax liability is governed by the notifications 19/2003-ST and 01/2006-ST which read as follows notifications 01/2006-ST. In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994) (hereinafter referred to as the Finance Act), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts the taxable service of the description specified in column (3) of the Table below and specified in the relevant sub-clauses of clause (105) of section 65 of the Finance Act, specified in ....
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.... the sub contractors have already paid duty on the value of inputs and input services. If the appellants contention is accepted it would result in defeating the very purpose of the notification and will also result in loss of revenue to the government. The scheme of Cenvat is designed in such a manner that every service provider is liable to pay service tax. The service receiver, if engaged in provision of taxable service can claim Cenvat Credit of the service. Service tax paid by the input service provider/sub-contractor by providing this mechanism Government had ensure that there is no double taxation and no cascading effect of tax. However, there are certain services in respect of which special dispensation has been provided. In such cases the abatement from value is given subject to condition that no credit of input and input services is taken. In such cases, the tax paid by the input service provider/sub-contractor is not allowed Cenvat Credit to the final service provider. The present case is an example of one such situation. For provision of any output service numerous inputs services are required. For example, a consultant providing consultancy would receives input services....
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....or were stated to be withdrawn. At that point, a general clarification as under was issued - 999.03/ 23-8-2007 A taxable service provider outsources a part of the work by engaging another service provider, generally known as sub-contractor, service tax is paid by the service provider for the total work. In such cases, whether service tax is liable to be paid by the service provider known as sub-contractor who undertakes only part of the whole work. A sub-contractor is essentially a taxable service provider. The fact that services provided by such sub-contractors are used by the main service provider for completion of his work does not in any way alter the fact of provision of taxable service by the sub-contractor. Services provided by sub-contractors are in the nature of input services. Service tax is, therefore, leviable on any taxable services provided, whether or not the services are provided by a person in his capacity as a sub-contractor and whether or not such services are used as input services. The fact that a given taxable service is intended for use as an input service by another service provider does not alter the taxability of the service provided. At times cir....
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....rculars were withdrawn only with the issue of Master Circular on 23-8-2007 is not relevant at all, particularly in view of the fact that the service being dealt in the present case is Commercial or industrial construction service which become taxable when the Cenvat credit scheme was already available. The four circulars which were issued in 1997-1998, in respect of four specified services were in any case redundant even in respect of those four services from 2002 onwards. In 2007, all that was clarified was that sub-contractor is also a service provider, and is liable to pay tax. 19. I also note that in the present case the appellant had no doubt about the provisions of law and the fact that his activity was chargeable to service tax. This is evident from the fact that the appellant was paying service tax before 1-3-2006. From 1-3-3006 the reason for stopping to make payment is only that the main contractor was specifically made ineligible to take credit of input services vide Notification No. 1/2006. In my opinion if law specifically prohibits doing something, the same cannot be circumvented by stopping to pay duty and claiming benefit of circulars which were not issued even in....
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.... main contractor. Thus in those circumstances there was a revenue neutral situation unlike the present case. 4.3 Ld. Counsel relied on the decision of the Tribunal in the case of Akruti Projects (supra), it is seen that the entire findings of the said decision are reproduced below: 5. Having considered the rival contentions, I find that the Notification No.1/2006-S.T. is in confrontation with the charging section. Section 66 of the Finance Act, 1994 and accordingly I hold the same is not applicable in the facts and circumstances of the case so far as the condition relating to not taking of Cenvat credit is concerned of the Service Tax paid by the sub-contractor. Further, I notice that the finding of fact recorded by the adjudicating authority having not been challenged by any of the parties, and in view of the categorical finding of fact recorded, I hold that the respondent assessee is entitled to refund and accordingly, the appeal of the Revenue is dismissed. 5.1 In view of the ruling of the Hon'ble Apex Court in the case of L & T Ltd. (supra), I hold that opinion of the third member as rendered in the case of Sunil Hi-tech Engineers Ltd. (supra) by this Tribunal is not bindi....
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....ied by the sub-contractor occurred in the form of single deemed sale or multiple deemed sales. The Hon'ble Supreme Court observed that the issue stands clarified in ruling of the Builders Association of India - 1989 73 STC 370, wherein it was held that ordinarily unless there is a contract to the contrary in the case of works contract the property in the goods used for construction passes to the owner of the land on which the building is constructed, when the goods or materials used are incorporated in the building. As per the Revenue, there are two deemed sales, one between the main contractor and contractee and the other between sub-contractor and the main contractor, in the event of the contractee not having any privity of contract with the sub-contractor. The Hon'ble Supreme Court in this ruling held that there is only one sale and only one transaction of the property in the goods and observed as follows : - 19. If one keeps in mind the above quoted observation of this Court in the case of Builders Association of India (supra) the position becomes clear, namely, that even if there is no privity of contract between the contractee and the sub-contractor, that would not do away ....
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....assed. In the case of Builders Association of India (supra) the Hon'ble Apex Court has observed that in case of works contract when goods are constructed on land belonging to the owner of the land then immediately on such construction, the property of the goods passes to the owner of the land. Thus, when a sub-contractor does construction work on a land, the propriety passes to the owner of the land immediately on construction. These are peculiar facts with reference to the works contract involving construction on land. This argument would not apply to the provision of service as there is no property transaction taking place which involves direct transfer from sub-contractor to the main recipient of service. In the instant case, the appellants are involved in providing services to the main contractor which they claimed to be a sub-contract. The appellants are providing services to the main contractor and not the owner of the land. Moreover the nature of services provided by the appellants to the main contractor is not the same as those provided by the main contractor to its client. 4.4 The appellants are relied on various trade notices issued by various Commissionerate. The follow....
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.... by the client directly. Ultimately, however the advertising agency charges the client for the amount paid to the film producer. Under these circumstances a question has been raised whether the film producer is also liable to pay service tax on the documentary or film prepared by him in relation to an advertisement. In this connection, it is relevant to note that taxable service is a service provided to a client by an advertising agency in relation to advertisement in any manner. Client is the advertiser. Therefore, in this case the advertising agency cannot be considered as a client when the definition of taxable service in relation to advertisement is interpreted in proper context. Accordingly, it is clarified that a film producer in this case is not liable to service tax. However, producer in this case is not liable to service tax. However, the advertising agency will no doubt include the expenses incurred on getting the film or documentary will bed collected by the agency. It goes without saying that if the film producer chooses to charge the client directly for the film or documentary produced by him then the film producer is to be regarded as having rendered service to the cl....