TaxTMI 
TaxTMI 
2023 (7) TMI 260
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....ction 65 of the Finance Act, 1994 which are taxable in terms of Section 66 of the Act, 1994. It was gathered by the department that the appellant has provided the aforesaid taxable services but did not pay the service tax on the gross amount received in lieu of rendering the services, accordingly the appellant was directed to provide the details of the nature of their business/activities undertaken by them along with the value of total amount received for providing such taxable services. The appellant provided copies of their income tax statement for the assessment year 2004-05, 2005-06 and 2006-07 and also submitted copy of their balance sheet for the year 2007-08. The proprietor of the appellant appeared before the Department and submitted the copies of TDS certificates pertaining to the financial year 2005-2006 to 2007-08 and also made his statement. The department issued the show cause notice alleging the non payment of service tax on the taxable service of 'Erection, Commissioning and Installation' provided by the appellant. Appellant filed detailed reply to the show cause notice taking the defence that the appellant is not the direct or the main contractor but a sub-contracto....
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....e barred as extended period of limitation cannot be invoked against the appellant as the appellant was under bona-fied belief that no service tax was payable by it in view of the clarification issued by the Department itself that a sub-contractor is not liable to pay service tax when the main contractor has paid the service tax on the entire amount. 5. He also submitted that no penalty can be imposed on the appellant as there was no intention of the appellant to evade payment of tax as alleged in the show cause notice. 6. He further submitted that the CBEC vide circular no. 96/07/2007 dated 23.08.2007 has clarified that the sub-contractor is liable to pay service tax even when the main contractor has paid the service tax on the whole amount. He cited the following decisions which have been decided after the CBEC's master circular dated 23.08.2007 wherein it was held that when the main contractor has paid the service tax itself, sub-contractor was not required to deposit the service tax. * Visesh Engineering Co. Vs. Commissioner of Customs, Ex. & S.T., Guntur, 2016 (43) S.T.R. 232 (Tri.-Hyd.) * Thadi Satya Ramalinga Reddy Vs. CCE, S.T. & Cus. 2017 (4) GSTL 421 (Tri.-Hyd.) * ....
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....referred to the Larger Bench and the Larger Bench has settled the issue in the case of CST Vs. Melange Developers P. Ltd., 220 (33) GSTL 116 (LB) wherein the Larger Bench has observed as under:- "8.1 It is seen that the amount received from the clients have been subjected to Service Tax at the hands of the main contractor. However, since the appellant, as a sub-contractor has provided services to the main contractor, is liable to discharge Service Tax on the consideration received from the main contractor namely, M/s. ACL. As correctly submitted by the Learned Authorized Representative for the Department, the main contractor would then be eligible to take credit of such Service Tax paid by the appellant as these are input services for the main contractor. This issue is no longer res integra and is settled by the decision of the Larger Bench of the Tribunal in the case of Commr. of S.T., New Delhi v. M/s. Melange Developers Pvt. Ltd. reported in 2020 (33) G.S.T.L. 116 (Tri. CB). It was observed as under: 15. It is not in dispute that a sub-contractor renders a taxable service to a main contractor. Section 68 of the Act provides that every person, which would include a sub-contra....
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....wever, the appellants contested the demand on the question of time bar also. It is their case that the full amount collected by RSIC from the importers and exports has been subjected to service tax. Even if the appellant is held liable on their share of Revenue received from RSIC the said tax is eligible for credit to RSIC. Further, the issue involved is interpretation of law and there is no intend to evade payment of duty in such situation. The appellants relied on various case laws to reiterate their views. We find that the appellant is having a strong ground regarding the question of time- bar. It is to be noted that all invoices, for full consideration, have been raised by RSIC and the amount collected from the clients [importers and exports] were subjected to service tax which was deposited to the Government. RSIC in turn are paying certain amount to the appellants to get the services in these ICDs. In such situation, there is a clear possibility for a bona fide belief that as the whole amount has been subjected to service tax the amount received by the appellant may not be liable to service tax in connection with the services rendered by them. The issue involved has been a ....
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....Bench of the Tribunal in the case of Melange Developers Pvt. Ltd. cited (Supra). Further, we find that this issue has also been considered recently by the Division Bench of the Ahmadabad Tribunal in the case of Shanti Construction Company Vs. CCE & S.T., Gujarat reported in 2023-TIOL-223-CESTAT-AHM wherein the Hon'ble Tribunal has considered various circulars issued by the department from time to time and also considered various decisions given by the Tribunal and thereafter held that extended period of limitation cannot be invoked to demand service tax in such cases. 13. In this regard, it is relevant to reproduce the said findings of the Tribunal in para 5.2 as under: "On limitation also we agree with the argument of Ld, Counsel. We find that during the relevant period there were various Circulars and trade notices by the Commissionerate clarifying that where the principle service provider discharged his service tax liability on the entire value of the services, a separate liability cannot be imposed against the sub-contractor. The said Circulars stands taken note of by the Tribunal in various judgments and its stand held that where the entire service tax has been paid on the ....