TaxTMI 
TaxTMI 
2024 (7) TMI 480
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.... was not discharging service tax on the value of services provided by it. Further, till 2009 the Appellant was providing services only to the units located in SEZ area, therefore, they had not taken service tax registration and it was only after the Appellant had planned to begin providing services to units other than SEZ units, it obtained the said registration. 3. Show cause notice SCN dated 28.03.2012 was issued alleging that the Appellant is a sub-contractor of M/s Larsen & Toubro L&T and therefore the services provided by the Appellant were not given to SEZ units or to developer of SEZ units but to L&T which was neither a developer of SEZ nor SEZ unit. Thus, the denial of benefit of the exemption had been proposed alleging that the Appellant had not complied with the conditions prescribed in Notifications No. 04/2004-ST dated 31.03.2004, 09/2009-ST dated 03.03.2009 and 15/2009-ST dated 20.05.2009. 4. The SCN culminated into the impugned order confirming the demand as proposed in the SCN and penalties under Section 76, 77 & 78 were imposed. Hence, the present appeal before the Tribunal. 5. The learned Advocate appearing on behalf of the Appellant submits that the Appel....
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....bmitted that Section 26(1)(e) of the SEZ Act clearly provides that every developer or entrepreneur shall be entitled to an exemption from service tax under Chapter-V of the Finance Act, 1994 on taxable services provided to a developer or unit to carry on the authorized operation in an SEZ. In terms of Section 2(j) of the SEZ Act, ONGC qualifies to be an entrepreneur as being a person who has been granted a letter of approval (annexure-12 of the appeal) by the Development Commissioner. The exemptions under the said Section 26 are subject to the conditions provided by the Central Government by means of rules framed in this regard. Rule 31 of the SEZ Rules, framed in relation to the said exemption, provides that all service providers shall be exempt from payment of service tax on the taxable services rendered by them to a Developer or a unit. As established in the preceding paragraph, the Appellant is providing the taxable services directly to the SEZ units therefore all the conditions required under Section 26(1)(e) of the SEZ Act read with Rule 31 of SEZ Rules stand satisfied and hence the Appellant is entitled to the benefit of the said exemption. 9. Further, it was submitted th....
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....and findings in the impugned order. 13. Heard both sides and perused the appeal records. 14. We find that usually, for the services transaction takes place between two parties, i.e. Service provider and Service receiver but in the present case there are three parties to the transaction. If sub-contractor is providing services to the main contractor for completion of main contract, then service tax is not leviable on the services provided by such sub-contractor. Unequivocally, Appellant qua sub-contractor had provided services exclusively to SEZ units and also wholly consumed by the SEZ units, hence not liable to service tax. Reliance has been placed on the Board's Circular No. 147/16/2011-ST dated 21.10.2011. Reliance is also placed on judgments mentioned below:- (i) L&T V/s. State of Andhra Pradesh-[(2006) 148 STC 616(AP)] (ii) State of Andhra Pradesh Vs. Larsen & Toubro [(2008) 16STT 501 =17VST 1(SC)] 15. Further by relying on the provisions of SEZ Act and Rules, the services rendered by the Appellant are fully exempted from service tax in terms of the provisions of the SEZ Act, the condition of exemption by way of refund imposed under the Notification ....
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.... and clearly an issue involving interpretation of complex provisions of law. It is also not in dispute that the issue in respect to liability of subcontractors to pay service tax has been decided by the larger bench of tribunal in case of Melange Developers Pvt Ltd [2020 (33) GSTL 116 (T-LB)]. Larger Bench has in the said case observed as follows: "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-contractor, providing taxable service to any person shall pay Service Tax at the rate specified. Therefore, in the absence of any exemption granted, a sub-contractor has to discharge the tax liability. The service recipient i.e. the main contractor can, however, avail the benefit of the provisions of the CENVAT Rules. When such a mechanism has been provided under the Act and the Rules framed thereunder, there is no reason as to why a sub-contractor should not pay Service Tax merely because the main contractor has discharged the tax liability. As noticed above, there can be no possibility of double taxation because the CENVAT Rules allow a provider of output ser....
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....f 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 and if a sub-contractor discharges the Service Tax liability, it will not result in double taxable even if the main contractor discharges the Service Tax liability because the credit of the earlier tax paid is available at a subsequent stage, but it is because of the decision of the Tribunal in Urvi Construction, that the Commissioner held that double taxation would result if a sub-contractor is also required to discharge Service Tax liability when the main contractor has discharged the entire liability. 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 disch....
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....etails of applicable exemption notification, gross amount received in money against service provided, value of service on which either Service Tax was not payable or Service Tax was exempted. I hold that by not filing the prescribed Return i.e. ST-3, the party had contravened the provisions of Rule 7 of Service Tax Rules- 1994 read with Section 70 of the Finance Act-1994. 4.20. In view of the facts discussed in the preceding paragraphs hold that the party had contravened the various provisions of Finance Act-1994 and Rules made there under with an intent to evade payment of Service Tax, in as much as : Sections 65A, Section 66, Section 67 as they failed to determine the correct value of the taxable services along with correct classification and rate of Service Tax applicable for charging Service Tax, Rule 6 read with Section 68 as they failed.to make payment of Service Tax with in the prescribed time limit, Rule 4 read with Section 69 as they failed to obtain registration in the prescribed time, Rules 7 read with Section 70 as they failed to file prescribed Service Tax returns They have wilfully suppressed the facts from the dep....
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....th regards to liability of subcontractor to pay service tax, chandigarh bench has in case of Meghraj Bansal [Final Order No 60187/2023 dated 07.07.2023] observed as follows: "9. Following the above decisions, we have no hesitation to hold that the appellant/sub-contractor is liable to pay the Service Tax even if the main contractor has discharged the liability. The issue on merits is found against the assessee and in favour of the Department. 10. Further, we find that the issue whether in such cases extended period of limitation can be invoked or not was also considered by various benches of Tribunal and in this regard the Delhi Tribunal in the case of Max Logistics Ltd. Vs. Commissioner of Central Excise, Jaipur, 2017 (47) S.T.R. 41 (Tri.-Del.). In para 11 has held as under: "11. Considering the above discussion and analysis the service tax 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 se....
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....of tax would not have come to the notice. Further, the balance sheet for certain years have not been furnished in time by the appellant which was obtained from Registrar of Companies. As such, it was held that the appellants wilfully suppressed material facts. We find that the service tax demand against the appellant was sought 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." 11. The said findings on limitation has also been approved by the Larger 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 Ahmad....