TaxTMI 
TaxTMI 
2025 (6) TMI 1966
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.... section 75 alongwith equal amount of penalty under section 78 and a penalty of Rs.20,000/- under section 77 of the Finance Act, 1994. ST/50395/2019: 2. The facts in brief involves the liability of M/s Rahul Agrawal, Damoh to pay service tax for providing construction services to M/s Agrawal Builders & Developers, Damoh. The issue arose when the department identified that the appellant no.1, a sub-contractor, had not registered for service tax and had failed to pay the applicable service tax on payments received during the period from Financial Year 2012-13 to 2016-17.The Appellant was engaged in providing construction of residential complex services, a taxable service under Section 66E(b) of the Finance Act, but had not registered under service tax. A Show Cause Notice was issued, citing that payments received by the Appellant for services provided to the main contractor were liable to service tax, as these payments fell under Section 66B of the Finance Act, and service tax of Rs.17,83,596/- was due for this period. Furthermore, the show cause notice invoked the extended period of limitation owing to suppression of facts, along with penalties under Section 78 and Section 77 ....
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....) had committed a grave error in holding that, the sub-contractor was liable to pay service tax, in view of the clarification of Board Circular No. 96/7/2007-ST dated 23.08.2007,whichhad clarified that the services provided by sub- contractors are in the nature of input services. The fact that a given taxable service is intended for use as an input service by another service provider does not alter the taxability of the service provided. In the present matter of dispute, the period involved is 2012-13 to 2016-17 i.e. after the issue of said Board‟s clarification. The said clarification pertained to the services related to the period prior to 01.07.2012 wherein the Board has clarified the taxability of said service vide the above master circular. 8. Learned counsel further submitted that the Commissioner (Appeals) had failed to note that the present case related to the period post the introduction of Declared Services (Section 66E), and negative list of services (section 66D). The services of the appellant was exempted from payment of Service Tax under Notification no. 25/2012 dated 20.06.2012. Therefore, the services after 01.07.2012 were not taxable. Learned counsel furth....
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....o Rs.17,79,363/- and Rs.14,15,826/- after examination of documentary evidences produced by the appellants before him. Learned counsel submitted that, the finding of the adjudicating authority may be treated as part and parcel of their present submissions. 12. Learned counsel further submitted that the Commissioner (Appeals) had committed a grave error in holding that, the sub- contractor is liable to pay service tax, which was contrary to the clarification of Board Circular No.96/7/2007-ST dated 23-08-2007. The said clarification of the Board clarified that the services provided by sub-contractors are in the nature of input services. The fact that a given taxable service is intended for use as an input service by another service provider does not alter the taxability of the service provided. In the present matter of dispute, the period involved is 2012-13 to 2016-17 i.e. after the issue of said Board clarification. The said clarification pertained to the services related to the period prior to 01-07-2012. Learned Counsel contended that the Commissioner (Appeals) had failed to note that the period involved in the present case was after introduction of declared services (Section66....
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....010 (17) S.T.R. 302 (Tri. Ahmd.). (iii) OIKOS vs. Commissioner of C. Excise, Bangalore-ll 2007 (5) S.T.R. 229 (Tri.-Bang). (iv) Visesh Engineering Co. vs. Commissioner of Customs, Ex., & S.T. Guntur 2016 (43) S.T.R. 232 (Tri. Hyd.). (v) Thadi Satya Ramalinga Reddy vs. CCE, S.T. & Cus, Visakhapatnam- II 2017 (4) G.S.T.L. 421 (Tri. Hyd.). 15. Learned Authorised Representative at the outset reiterated the findings of the impugned order. He further submitted that the issue of liability of service tax on sub-contractor was no more res- integra in view of the Larger Bench decision in Melange Developers Pvt Ltd. 16. We have considered the submissions advanced by the learned counsel and the learned Authorised Representative of the Department. We find that it is an admitted fact that the appellant was a sub-contractor. The appellants have themselves stated that they are sub-contractors as per Board‟s Circular, sub-contractors were not liable to pay service tax. 17. We find that the issue relating to liability of sub-contractor to pay service tax was considered by the Larger Bench of this Tribunal in the decision of Commissioner of Service Tax, New D....
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....ady 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 specified in section 66 in such a manner and within such a period as may be prescribed. Section 94 of the Act deals with power to make Rules. Sub-section (1) provides that the Central Government may, by Notification in the official gazette, make Rules for carrying out the provisions of Chapter V of the Act. Sub-section (2)(a) provides that such Rules may provide for collection and recovery of Service Tax under sections 66 and 68 of the Act. In exercise of the powers conferred by section 37 of the Central Excise Act, 1944 and section 94 of the Act and in supersession of the CENVAT Credit Rules, 2002 and Service....
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....at when Service Tax was introduced in the year 1994 there were only three taxable services, but later 100 services had been specified as taxable services and that since the introduction of Service Tax, number of clarifications had been issued, but it had become necessary to take a comprehensive review of all the clarifications keeping in view the changes that had been made in the statutory provisions, judicial pronouncements and other relevant factors. The relevant portion of the Master Circular, insofar as it relates to sub-contractors, is reproduced below : 999.03/23.08.07 A taxable service provider outsources a part of the work by engaging another Service provider, generally known as sub- contractor. Service tax is paid by the service provider for the total work. In such cases, whether service tax is liable to be paid by the service provider known as sub-contractor who undertakes only part of the whole work A sub-contractor is essentially a taxable service provider. The fact that services provided by such sub-contractors are used by the main service provider for completion of his work does not in any way alter the fact of provision of taxable service by the sub- contrac....
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....ct 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 service to take credit of the Service Tax paid at the preceding stage. xxx xxx xxx 26. At this stage, it would also be useful to refer to a larger Bench decision of the Tribunal in Vijay Sharma & Company vs CCE, Chandigarh reported in2010 (20) STR 309 (Tri.- LB). The issue that arose before the larger Bench was as to whether service provided by a sub-broker are covered under the ambit of Service Tax and taxable or not. After noticing that a sub-contracto....