TaxTMI 
TaxTMI 
2022 (10) TMI 60
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....d the balance amount shall be paid forthwith by them; c) I order payment of interest by Shri Sukhdeo Vasudeo Yadav, the Proprietor of M/s Om Sai Fabricators on the delayed payment of service tax at the appropriate rates and as applicable in force under section 75 of the Finance Act, 1994; d) I impose penalty of Rs.1,25,36,776.00 (Rupees one crore twenty five lakh thirty six thousand seven hundred seventy six only) on Shri Sukhdeo Vasudeo Yadav, the Proprietor of M/s Om Sai Fabricators under the provisions of section 78 of the Finance Act, 1994. e) I do not impose penalty under section 76 of the Finance Act, 1994, as discussed supra; f) I impose a penalty of Rs 5,000/- (Rupees Five thousand only) on Shri Sukhdeo Vasudeo Yadav, the Proprietor of M/s Om Sai Fabricators under the provisions of section 77 the Finance Act, 1994." 2.1 Based on intelligence that the noticee is charging and collecting service tax from their clients on the taxable service provided but not depositing the same with the Government exchequer investigations were initiated against the appellant. It was noticed that the noticee charged service tax separately in few of the invoices whereas in other cases no....
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....-11-2008 wherein has admitted of non-payment of St on sub contract value raised to the Main Contractor. * Denial of Abatement of 67% (Notification No. 15/2004-ST: The Gross Amount does not include "Free Supply" and the Abatement under Notification No 15/2004-ST dated 10-09- 2014 should be granted. This issue is no more res-integra in terms of decision in case of Bhayana Builders (P) Ltd 2013(32) S. T. R. 49 (Tri-LB) affirmed by Supreme Court 2018 (10) GSTL 118 (S. C.) * BONAFIDE BELIEF: The Main Contractor who is Multinational Company had issued Certificate dated 18-07 2007 to the Appellant certifying that the Appellant need not pay or charge ST as the Main Contractor is paying the ST on entire Contract. The Appellant had no reason to doubt of the same. The Main Contractor vide letter 30-11- 2009 provided all the Challans evidencing payment of Service Tax on the entire contract value which includes values of sub-contract of the Appellant. The copies of Challans of the Main Contractor are enclosed. These facts were never verified by the Investigation Agency. Thus, the Appellant had Bonafide belief which was backed by evidentiary documents. * Conflicting decisions & instruction....
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....ion of the facts and gross contravention of provision of law with sole intent to evade duty. Investigation was initiated against the appellant on the intelligence input that the appellant is charging and collecting service tax from their clients on the taxable services provided but not depositing the same with govt. exchequer. * During investigation, statement of Shri Sukhdev Vasudev Yadav (Prop. M/s Om Sai Fabricator) was recorded who deposed the following relevant facts: * They were engaged in provision of taxable services since 2006 and were duly registered under service tax. * They were providing taxable services mainly to M/s Gamon India Ltd., Mumbai, M/s Japsin Jacob Wire Drawing Pvt. Ltd., New Delhi, M/s IMC Ltd., JNPT, and M/s man Infra Project Ltd., Mumbai as a sub- contractor. They have also provided taxable services to few other companies like BPCL, Viraj Agro Products Pvt. Ltd. etc besides the afore-stated major companies. * The appellant asserted that they have already paid major part of their service tax liability except in respect of services provided to M/s Gammon India Limited in capacity of sub-contractor. * The reason for non-payment of service tax on t....
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....er the noticee has discharged its duty liability properly and whether its contention that service tax liability on commercial or industrial construction service provided by them as sub contractor arises or not. 14. I find that the noticee has not cared to file any written submissions in the matter even after one year and also not cared to turn up for the personal hearings granted on initial three occasions. to an afterthought they have requested and attend the hearing on 07.11.2012 and made a frail attempt to cover up their duty liability. 15. I find that the noticee has not produced proof of tax payment by Gammon India Ltd in spite of their claim that Gammon India Ltd would pay the service tax, which is their primary defence. I also find that the noticee by its own admission submitted that from 15 April 2008 they started charging service tax on the service provided as sub-contract and that the same would be credited to the service tax department. This itself is a clear admission by themselves that they are liable to pay duty the issue is resolved squarely by the Board vide its circular No. 96/7/2007-ST, dated 23.07.2007 wherein it has been clarified that a sub-contractor is ....
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....ty under section 76 as the notice is liable for penal action under section 78 ibid" 4.3 On merits we find that issue has been decided by larger bench of tribunal in the case of Melange Developers Private Limited [2020 (33) G.S.T.L. 116 (Tri. - LB] wherein larger bench has held as follows: "12. It is true that prior to 2007, various Service Tax, Trade Notices/ Instructions/ Circulars/ Communications had been issued exempting certain category of persons from payment of Service Tax. A sub-contracting Customs House Agent was exempted from payment of Service Tax on the bills raised on the main Customs House Agent. When an architect or interior decorator sub-contracted part/whole of its work to another architect or interior decorator, then no Service Tax was required to be paid by the sub-contractor, provided the principal architect or interior decorator had paid the Service Tax. However, all these Trade Notices/ Instructions/ Circulars/ Communications were superseded by the Master Circular dated 23 August, 2007 issued by the Government of India, Ministry of Finance. The Circular noticed that when Service Tax was introduced in the year 1994 there were only three taxable services, but ....
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.... may amount to 'Double Taxation', but this issue has to be examined in the light of the credit mechanism earlier introduced through Service Tax Credit Rules, 2002 granting benefit of tax paid on input services if the input services and the output services fell under the same taxable services and the subsequent amendment made on 14 May, 2003 granting benefit of tax paid on input services even if the input service and the output service belonged to different taxable categories. The aforesaid Service Tax Credit Rules were later superseded on 10 September, 2004 by Cenvat Credit Rules, 2004. Rule 3 of these Rules provides that a manufacturer or producer of final product or a provider of output service shall be allowed to take credit (known as 'Cenvat Credit') of various duties under the Excise Act, including the Service Tax leviable under Sections 66, 66A and 66B of the Act. Rule 3(4) further provides that Cenvat credit may be utilized for payment of Service Tax on any output service. It is for this reason that the Master Circular dated 23 August, 2007 was issued superseding all the earlier Circulars, Clarifications and Communications. 15. It is not in dispute that a sub-contractor re....
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....been provided by the sub-contractors such sub-contractors are not liable to pay service tax and service tax liability is on the main contractor. Taking note of the fact of the contention that main contractor has paid the service tax and charging service tax on the sub-contractor again would amount to taxing the same service twice and also taking note of the circular cited by the learned advocate and the decisions of the Tribunal cited, I find that if the appellant is required to pay the service tax it would amount to taxing the same service twice and the circular and the Tribunal's decision are squarely applicable to the facts of this case and accordingly appeal is allowed with consequential relief to the appellant." 18. In BCC Developers and Promoters Pvt. Ltd. it was observed : "6.1 We agree with the submission of the Ld. Counsel that no double taxation is permissible under the law. The Constitution (Article 265) provides to take the exact amount of tax i.e. neither more nor less. In the instant case, if the principal has already paid the Service Tax, then the same cannot be demanded from the appellant. As per the clarification of the Board's Circular dated 23-8-2007 as ....
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....Services Pvt. Ltd. v. Commissioner of Service Tax, Delhi, reported in 2017 (52) S.T.R. 508 (Tri. - Del.), the Division Bench has held : "6. Regarding the contention of the appellant that they have acted only as a sub-contractor and demanding service tax from them will amount to double taxation as the main contractor also is rendering similar service to ONGC, we find no legal basis for the contention of the appellant. The service tax leviable at the hands of each service provider is decided by nature of activities undertaken by them. If the same is covered by scope of the taxable entry under Finance Act, 1994 tax liability arises. The said service becomes part of final service rendered by main contractor is of no consequence to determine the tax liability of each and every service provider. If at all, the service tax paid by a sub-contractor which becomes part of service further provided by the main contractor, the scheme of credit as envisaged by the Cenvat Credit Rules, 2004 will come into play subject to fulfilment of conditions therein. It is nobody's case that the sub- contractors per se are not liable to service tax even if they rendered taxable service " [empha....
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....y of sub-broker and stock broker is established and transactions are provided to be one and the same. In other words, if the main stock broker is subjected to levy of service tax on the self same taxable service provided by sub-broker to the stock broker and the sub-broker has paid service tax on such service, the stock broker shall be entitled to the credit of service tax. Such a proposition finds support from the basic rule of Cenvat credit and service of a sub- broker may be input service provided for a stock-broker if there is integrity between the services. Therefore, tax paid by a sub- broker may not be denied to be set off against ultimate service tax liability of the stock broker if the stock broker is made liable to service tax for the self same transaction. Such set off depends on the facts and circumstances of each case and subject to verification of evidence as well as rules made under the law w.e.f. 10-9-2004. No set off is permissible prior to this date when sub-broker was not within the fold of law during that period." 27. The Commissioner did express in the impugned order that under the Cenvat Scheme every stage of provision of service is required to be taxed....
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....the manner provided for in the Cenvat Credit Rules of 2004. 30. Thus, for all the reasons stated above, it is not possible to accept the contention of the Learned Counsel for the Respondent that a sub-contractor is not required to discharge Service Tax liability if the main contractor has discharged liability on the work assigned to the sub-contractor. All decisions, including those referred to in this order, taking a contrary view stand overruled. 31. The reference is, accordingly, answered in the following terms : "A sub-contractor would be liable to pay Service Tax even if the main contractor has discharged Service Tax liability on the activity undertaken by the sub-contractor in pursuance of the contract." 4.4 Appellant do not challenge the above position and agree that the issue is squarely covered by the decision of larger bench of tribunal. However they challenge the demand on the ground of limitation and have also claimed that abatement as per the Notification No 15/2004-ST dated 10.09.2004. 4.7 It is evident from the facts of the case that the appellant are merely providing the taxable services simplicitor without any element of transfer of the material along....
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....w. Further the submission to the effect that there were conflicting circulars is also not borne out by any evidence. Larger bench has in case of Melange Developer Pvt Ltd. clearly in para 12 noted that all Trade Notices/ Instructions/ Circulars/ Communications were superseded by the Master Circular dated 23 August, 2007, and this circular had clarified the liability of sub contractor to pay the service tax. It is settled law that bonafide belief is not the blind belief and needs to be established. Hon'ble Bombay High Court has in case of Responsive Industries Ltd [2019 (26) G.S.T.L. 457 (Bom.)] held as follows: "9. The contention that there was a bona fide belief that the Appellant are not liable to pay the service tax on outward transportation of goods and the GTA is not supported by any reasonable explanation. The bona fide belief that one is not liable to pay the tax has to be based on some facts on record which led to the belief. It is not the Appellant's case that the belief based on a ruling of the some authority that it not liable to pay service tax on outward transportation. A mere statement to the effect that the Appellant was under a bona fide belief of non liability of....
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....ed by the M/s Gammon India only need to be negated. This condition in contract itself shows that appellant was aware of his liability to pay service tax. 4.12 The Appellant concealed the correct taxable amount with the service tax department, until the Departmental officers initiated an inquiry in this regard. These facts were suppressed with intent to evade the payment of service tax due on various taxable services provided by them thereby facilitating the evasion of service tax payable on the said services so rendered by them. Thus it the extended period, as provided for under the proviso to sub-section (1) of section 73 ibid for recovery of such service tax not paid and/or short paid by Appellant has been correctly invoked by the revenue authorities. 4.13 For the facts as stated above when we hold that the ingredients for invocation of the extended period of limitation were present, we are bound to uphold the penalties imposed on the appellant under Section 78 of Finance Act, 1994 in view of the decision of Hon'ble Apex Court in case of Rajasthan Spinning Mills [2009 (238) ELT 3 (SC))] wherein following has been held: "20. At this stage, we need to examine the recent decisio....
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...." After referring to a number of decisions on interpretation and construction of statutory provisions, in paragraphs 26 and 27 of the decision, the court observed and held as follows : "26. In Union Budget of 1996-97, Section 11AC of the Act was introduced. It has made the position clear that there is no scope for any discretion. In para 136 of the Union Budget reference has been made to the provision stating that the levy of penalty is a mandatory penalty. In the Notes on Clauses also the similar indication has been given. "27. Above being the position, the plea that the Rules 96ZQ and 96ZO have a concept of discretion inbuilt cannot be sustained. Dilip Shroff's case (supra) was not correctly decided but Chairman, SEBI's case (supra) has analysed the legal position in the correct perspectives. The reference is answered ". 21. From the above, we fail to see how the decision in Dharamendra Textile can be said to hold that Section 11AC would apply to every case of non-payment or short payment of duty regardless of the conditions expressly mentioned in the section for its application. 22. There is another very strong reason for holding that Dharamendra Textile could not have....
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....egistration and had not filed ST-3 returns within the prescribed time, penalty imposed under Section 77 is justified. 4.15 As we uphold the demand for service tax, demand for interest follows, and needs to be upheld. It is now settled law that once the tax is demandable the interest as prescribed by law will automatically follow. 4.16 Appellant has in his appeal and during the arguments relied upon certain other case laws which have been rightly distinguished by the authorized representative in the manner as stated in table below: Sr. No. Case details Ratio 1 Vijay Sharma & Company [2010 (20) STR 309 (Tri.-LB)]. It is true that there is no provision under Finance Act, 1994 for double taxation. The scheme of service tax law suggest that it is a single point tax law without being a multiple taxation legislation. In absence of any statutory provision to the contrary, providing of service being event of levy, self same service provided shall not be doubly taxable. If Service tax is paid by a sub-broker in respect of same taxable service provided by the stock-broker, the stock broker is entitled t....