TaxTMI 
TaxTMI 
2024 (4) TMI 434
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....espondent had evaded Service tax amounting to Rs.2,61,97,972/- for the period 2010-11 (Oct-2010 to March-2011) to 2015-16 (April-2015 to Sept-2015) in contravention of the provisions of Section 68 and 70 of Finance Act, 1994 read with Rule 6 and 7 of the Service Tax Rules, 1994 by not paying service tax, and by not filing the statutory returns in respect of the taxable services provided by them. The respondent registered with the Service Tax Department in August, 2013 and began paying service tax and the statutory returns were also filed with the department. 2.1 Consequently, a show cause notice dated 22.04.2016 was issued to the appellant proposing:- (i) Recovery of Service Tax amounting to Rs. 2,61,97,972/- under proviso to Section 73(1) of Finance Act, 1994 alongwith interest and appropriation of Rs.1,42,94,158/- already deposited. (ii) Penalty under Section 77(1)(a),77(1)(c) &78 of Finance Act, 1994. (iii) Late fees for non filing /late filing of each of half yearly/quarterly returns during the period Oct, 2010 to Sept. 2015 in terms of Rule 7C of the Service tax Rules, 1994 read with section 70 of Finance Act, 1994. 2.2 The appellant filed a de....
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....emption. It has to be appreciated that the wordings used in the exemption are 'services by way of construction of roads etc and not 'services in relation to construction of roads etc. It is thus apparent that just because the main contractor is providing the service by way of construction of roads, airports, railways, transport terminals, bridges, tunnels, dams etc., it would not automatically lead to the classification of services being provided by the sub-contractor to the contractor as an exempt service. However, a sub-contractor providing services by way of works contract to the main contractor, providing exempt works contract services, has been exempted from service tax under the mega-exemption if the main contractor is engaged in providing exempt services of works contracts. It may be noted that the exemption is available to sub-contractors engaged in works contracts and not to other outsourced services such as architect or consultants." 3.1 The Learned Authorized Representative contended that the Board had issued similar clarification vide Circular No. 147/16/2011-S.T., dated 21-10-2011. The relevant para 2 is reproduced below for ease of referen....
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....respondent was not entitled to the benefit of exemption being the services provided by them as a sub-contractor to the main contractor and do not independently fall within the ambit of the exemption. 4. Learned Counsel for the Respondent submitted that the appellants paid service tax amounting to Rs.53,31,429/- on the services of value of Rs.4,31,34,535/- provided to M/s Gammon India Ltd. though the services were exempted. Hence, the total amount in dispute was not Rs.87,14,512/- but Rs.33,83,083/- which has been acknowledged in Para 30.1.6 of the impugned order. 4.1. The Learned Counsel submitted that the department was referring to the clarification in Para 7.11.11 of the Education Guide and Board Circular No.147/16/2011 ST dt.21.10.2011. She contended that the content of clarification is not applicable in the present case as the services provided by the appellant for Construction of Road, Bridge and Tunnel which is specifically exempted whereas the clarification/circular referring Architect Service, Consultant Engineering Services etc. which are specifically taxable. She submitted that the appellant is covered under Para 3 of the circular. She further submitted that since ....
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....efined under Sec 65B (44) of the Finance Act, 1994. However, if the site formation and clearance, excavation and demolition and such other similar activities et cetera when provided in the course of construction of roads, airports, railways, transport terminals, bridges, tunnels, dams and ports to any person by any person are exempt from the of service tax leviable thereon under section 66 of the said Finance Act. With effect from 01.07.2012, the services provided by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of road, bridge, tunnel, or terminal for road transportation for use by general public are exempt in terms of S. No. 13(a) of notification no. 25/2012. Therefore, during the relevant period, i.e., 2010-11 to 2015-16, the services of excavation and site preparation as provided by the assessee are exempt from levy of service tax." 7. We note that the observations and the findings of the adjudicating authority insofar as the period post 01.07.2012 is concerned, is correct. It has been correctly held that services provided by the respondent are exempt in terms of S. No. 13(a) of notificatio....
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....only for site formation and clearance, excavation and earthmoving and demolition services. The bill of quantities enclosed in the said contract talks about cutting, site clearing and grabbing, earth work in excavation, earth work and filling, mechanical carriage and earth work for roads. This tax liability which has been sought and confirmed from the appellant is in respect of earth work for roads executed by the appellant for the thermal power plant. We find that the arguments putforth by the learned counsel that these activities amounts to construction of roads and discovered by notification number 17/2005-ST is not on a firm footing. The detailed activity which is indicated in the said works order clearly states that the appellant is required to undertake only the activity of earth work for roads, letterpress of sub-grade by excavation/filling required level, consolidation with power roadroller of 8-12 ton capacity, compact to 95% procter's density at OMC by mechanical device, dressing to camber, making good the undulation, etc., including all leads and lifts. The clarity of the work in the contract executed by the appellant would indicate that they had not constructed any road ....
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....ruction of a new residential complex or a part thereof; or (d) completion and finishing services, repair, alteration, renovation or restoration of, or similar services, in relation to (b) and (c); or (e) turnkey projects including engineering, procurement and construction or commissioning (EPC) projects;" 9. It is not in dispute that the activity undertaken by the sub-contractor falls under the category of 'Works Contract' service. What is sought to be contended is that the main contractors, who had given sub-contracts to the sub-contractor through various work orders, had already discharged the Service Tax liability on the entire contract amount and, therefore, the sub-contractor was not required to pay any Service Tax. 10. Section 66, as substituted by the Finance Act, 2007, provides that there shall be levied a tax (hereinafter referred to as the 'Service Tax') @ 12% of the value of taxable services of various sub-clauses of clause (105) of section 65 and collected in such a manner as may be prescribed. Section 68 of the Act provides that every person providing taxable service to any person shall pay Service Tax at the rate spe....
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.............................................................................. .................................................................................................................... 29. The submission of the learned Counsel for the Respondent regarding 'revenue neutrality' cannot also be accepted in view of the specific provisions of Section 66 and 68 of the Act. A sub-contractor has to discharge the Service Tax liability when he renders taxable service. The contractor can, as noticed above, take credit in 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 subcontractor.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 liabili....