TaxTMI 
TaxTMI 
2023 (8) TMI 851
X X X X Extracts X X X X
X X X X Extracts X X X X
....-contractor. Therefore, a show cause notice dated 07.06.2012 was issued to the appellant covering the period 13.11.2007 to 31.03.2011 by invoking the extended period of 5 years as per the first Proviso to Subsection(1) of Section 73 of Finance Act, 1994 for demanding Service Tax amounting to Rs 86,57,392/- by the Order-in-Original dated 03.09.2013. The commissioner confirmed the demand holding that Master Circular No. 96/7/2007- Service Tax dated 23.08.2007 covers the issue of liability of sub-contractor. 1.1 As per the said circular, sub-contractor is liable to pay Service Tax is not absolved even when the main contractor discharge the service tax on the total value of the Service tax. The demand of service tax was confirmed invoking extended period of limitation under proviso to section 73(1) of Finance Act, 1994. The penalty under section 78 and 77 of the Finance Act, 1994 were also imposed therefore, the present appeal filed by the appellant. 2. A letter dated 03.08.2023 given by the Chartered Accountant Shri Hardik P. Shah and Company is placed on record, according to which it was requested to decide the present appeal considering submissions placed on record and in the ligh....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tice was issued after one year i.e. 07.06.2012 therefore the entire demand is under extended period. 4.1 In the present case the appellant have submitted that the appellant was admittedly working as sub-contractor. They were under bonafide belief that since the main contractor has discharged the service Tax on the entire value including the value of the appellant's service they are not liable to pay the service Tax. In this regard we find that the issue was not free from doubt and the matter was referred to the Larger Bench and due to conflicting judgments the larger bench has finally decided thatin case of service provided by sub-contractor even though the main contractor have paid the service tax on total value the sub-contractor is liable to pay service tax.Since there was serious doubt about the taxability of the sub-contractor and also due toconflicting judgment, which subsequently resolved by the larger bench in the case of M/s Melange developers Pvt. Ltd (Supra), the bonafide belief of the appellant that they are not liability to pay service tax cannot be doubted, questioned.In such situation the extended period which can be invoked only on the ingredient such as suppuratio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f M/s. Semac Pvt. Ltd. (supra), M/s. Shivhare Roadlines (supra) and M/s. Urvi Construction (supra), the Tribunal had held that sub-contractors are not liable to pay Service Tax. There were conflicting views and the issue was referred to Larger Bench. In M/s. Max Logistics Ltd. v. Commissioner of Central Excise, Jaipur reported in 2017 (47) S.T.R. 41 (Tri. - Del.), the question as to whether extended period of limitation can be invoked on the above issue has been analysed as below : Considering the above discussion and analysis the service tax "11. liability on the appellant cannot be contested as invalid. We uphold the findings in the impugned order regarding tax liability. However, 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ght to be confirmed mainly on the basis of the terms of agreement between the appellant and RSIC. The gross receipt of RSIC and service tax payment thereupon is available with the Department. A portion of that receipt is now being taxed under BIS at the hands of the appellant. The service tax liability is as such on the arrangement based on agreement which is also the basis for payment of full service tax by RSIC. In other words, the service tax liability of both RSIC and the appellant has common source agreement. As such, we find the demand for extended period is not sustainable in the present case." 9.2.1 On perusal of the Show Cause Notice, there is no positive act of wilful suppression/mis-statement alleged on the part of the assessee. In the last part of paragraph 3 of the Show Cause Notice, it is merely stated as under: "...As the non-payment/non-registration came to the notice of the department only after gathering intelligence and discreet investigation conducted by the headquarters preventive unit, it appears that extended period of limitation is applicable to the facts of the case for recovery of service tax." 9.2.2 Even in the Order-in-Original, the only finding fo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he 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 subject matter of interpretation by the Tribunal and High Courts. In fact the earlier Circular issued by the Board, covering the period prior to the introduction of Cenvat Credit Rules gave an impression that ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 full consideration of the services, the sub-contractors' liability would not arise to pay service tax again on the part of principle service. One such reference can be made by following circulars:....