TaxTMI 
TaxTMI 
TaxTMI 
2025 (9) TMI 622
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....ose a penalty of Rs.10,49,780/- (Rupees Ten Lakhs Forty Nine Thousand Seven Hundred Eighty only) upon M/s Tapasya Projects Limited, 170/500(16) Lajpat Nagar, Kanpur under Section 78 of the Finance Act, 1994." 2.1 Appellant is holding Service Tax Registration No. AABCT4247NST002 and is engaged in providing service of Renting of Immovable Property and Security Detective Agency Service under Partial Reverse Charge Mechanism. 2.2 During the course of audit of records of the party, it was observed that appellant has received commission from M/s Ritu Tandon, Kanpur for mobilizing funds in insurance policies. M/s Ritu Tandon is an insurance agent of M/s Birla Sunlife insurance Co. Ltd. Appellant supports the business of M/s Ritu Tandon by way of arranging clients for M/s Ritu Tandon and in lieu thereof they receive commission from M/s Ritu Tandon. 2.3 Prior to introduction of negative list based taxation regime i.e. before 01.07.2012, services provided by the appellant were taxable under the category Business Auxiliary Services as defined under Section 65(19) of the Finance Act 1994. The said Section 65(19) ibid states that "Business Auxiliary Service' meant any service in relation....
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....e Order-in-Original dated 22.02.2017 referred in para 1 above. 2.7 Aggrieved appellant have filed appeal before Commissioner (Appeals) which has been dismissed as per the impugned order. 2.8 Aggrieved appellant have filed this appeal. 3.1 We have heard Shri Amit Awasthi, Advocate for the appellant and Shri A.K. Choudhary, Authorized Representative for the revenue. 3.2 Arguing for the appellant learned Counsel submits that- * The first point is to be determined is that if service tax liability stands to be discharged on full and complete value by the insurance agent (M/s Ritu Tandan) then the sub-contractor cannot be taxed again in respect of the same services for this proposition if appellant is asked to pay service tax then it would amount to double taxation. Reliance is placed on the following decisions- * M/s Vijay Sharma & Co.2010 (20) STR 309 (Tri.-LB); * CCE, Kanpur Vs M/s PK Khandelwal and Co 2016-TIOL-45-CESTAT-All; * M/s Amar Travels (India) Ltd. Vs CCE, Delhi 2018 (10) GSTL 77; * Navyug Alloys Pvt. Ltd. 2009 (13) STR 421 (Tri.-Ahmd.); * Menon Pistons Ltd. 2010 (18) STR 803 (Commr.-Appl.); * Mandev Tubes 2009 (16) STR 724 (Tri.-Ahmd.); * Geeta Industrie....
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....ded on behalf of the client; or (iv) Procurement of goods or services, which are Inputs for the client; or [Explanation For the removal of doubts, It is hereby declared that for the purposes of this sub-clause, "inputs" means all goods or services intended for use by the client;] [(v) Production or processing of goods for, or on behalf of, the client;] (vi) Provision of service on behalf of the client; or (vii) a service incidental or auxillary to any activity specified in sub-clauses (i) to (vl), such as billing, Issue or collection or recovery of cheques, payments, maintenance of accounts and remittance, Inventory management, evaluation or development of prospective customer or vendor, public relation services, management or supervision, and includes services as a commission agent, [but does not Include any activity that amounts to manufacture of excisable goods]. [Explanation for the removal of doubts, it is hereby declared that for the purposes of this clause, (a) "commission agent" means any person who acts on behalf of another person and causes sale or purchase of goods, or provision or receipt of services, for a consideration, and Includes any person who,....
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....d from the appellant under the same category nor the tax has been demanded on the same transaction. Thus we do not find any merits in the submissions made by the appellant that demand of service tax made from him under this category would result in the double levy of tax, and reject the same. 4.5 Further, in the case of M/s Om Sai Fabricators 2023 (6) Centax 208 (Tri.-Bom) this Tribunal has held as follows:- "4.3 On merits we find that issue has been decided by larger bench of tribunal in the case of Melange Developers Private Limited [2020 (33) G.S.T.L. 116 (Tri. - LB] wherein larger bench has held as follows: "12. It is true that prior to 2007, various Service Tax, Trade Notices/ Instructions/ Circulars/ Communications had been issued exempting certain category of persons from payment of Service Tax. A sub-contracting Customs House Agent was exempted from payment of Service Tax on the bills raised on the main Customs House Agent. When an architect or interior decorator sub-contracted part/whole of its work to another architect or interior decorator, then no Service Tax was required to be paid by the sub-contractor, provided the principal architect or interior decorator had p....
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....d for use as an input service by another service provider, it would still continue to be a taxable service. 14. It can be used that if a main contractor has paid Service Tax on the entire amount of the main contract out of which a portion has been given to a sub-contractor, then if a sub- contractor is required to pay Service Tax, it may amount to 'Double Taxation', but this issue has to be examined in the light of the credit mechanism earlier introduced through Service Tax Credit Rules, 2002 granting benefit of tax paid on input services if the input services and the output services fell under the same taxable services and the subsequent amendment made on 14 May, 2003 granting benefit of tax paid on input services even if the input service and the output service belonged to different taxable categories. The aforesaid Service Tax Credit Rules were later superseded on 10 September, 2004 by Cenvat Credit Rules, 2004. Rule 3 of these Rules provides that a manufacturer or producer of final product or a provider of output service shall be allowed to take credit (known as 'Cenvat Credit') of various duties under the Excise Act, including the Service Tax leviable under Sections 66, 66A ....
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....cular No. 96/7/2007-S.T., dated 23-8-2007, a stand has been taken that there is no exemption to a sub-contractor from payment of service tax merely because the contractor pays the tax. However, he submits that for the period circular issued late by the Board in 1997 was applicable and according to this Circular where the services have been provided by the sub-contractors such sub-contractors are not liable to pay service tax and service tax liability is on the main contractor. Taking note of the fact of the contention that main contractor has paid the service tax and charging service tax on the sub-contractor again would amount to taxing the same service twice and also taking note of the circular cited by the learned advocate and the decisions of the Tribunal cited, I find that if the appellant is required to pay the service tax it would amount to taxing the same service twice and the circular and the Tribunal's decision are squarely applicable to the facts of this case and accordingly appeal is allowed with consequential relief to the appellant." 18. In BCC Developers and Promoters Pvt. Ltd. it was observed : "6.1 We agree with the submission of the Ld. Counsel that no do....
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....ntractor is required to discharge the Service Tax liability even if the main contractor has discharged the tax liability. 22. The decisions of the Tribunal holding that double taxation will not result if a sub-contractor discharges the tax liability because of the Cenvat Rules, now need to be referred to. 23. In Max Tech Oil & Gas Services Pvt. Ltd. v. Commissioner of Service Tax, Delhi, reported in 2017 (52) S.T.R. 508 (Tri. - Del.), the Division Bench has held : "6. Regarding the contention of the appellant that they have acted only as a sub-contractor and demanding service tax from them will amount to double taxation as the main contractor also is rendering similar service to ONGC, we find no legal basis for the contention of the appellant. The service tax leviable at the hands of each service provider is decided by nature of activities undertaken by them. If the same is covered by scope of the taxable entry under Finance Act, 1994 tax liability arises. The said service becomes part of final service rendered by main contractor is of no consequence to determine the tax liability of each and every service provider. If at all, the service tax paid by a sub-co....
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....statutory provision to the contrary, providing of service being event of levy, self same service provided shall not be doubly taxable. If Service tax is paid by a sub-broker in respect of same taxable service provided by the stock-broker, the stock broker is entitled to the credit of the tax so paid on such service if entire chain of identity of sub-broker and stock broker is established and transactions are provided to be one and the same. In other words, if the main stock broker is subjected to levy of service tax on the self same taxable service provided by sub-broker to the stock broker and the sub-broker has paid service tax on such service, the stock broker shall be entitled to the credit of service tax. Such a proposition finds support from the basic rule of Cenvat credit and service of a sub- broker may be input service provided for a stock-broker if there is integrity between the services. Therefore, tax paid by a sub- broker may not be denied to be set off against ultimate service tax liability of the stock broker if 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....
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....y of VAT. 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 sub-contractor. 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 liability on the activity undertaken by the sub-contractor in pursuance of the contract." 4.4-4.7 ---------------------------------- 4.8 To argue on the limitation appellant have pressed the ground of bonafide belief ....
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....e would be credited to the service tax department; that he does not have any agreement with these 3 firms but has letter of indent from Gammon India Ltd. 4.10 Shri Sukhdeo Vasudeo Yadav, in his statement dated 21.11.2008 deposed that he paid service tax for the year 2006- 07 but did not pay service tax for 2007-08 and 2008-09(up to October 2008); that in 2006-07, he discharged service tax on the invoices where contract was direct but where contract was on sub-contract basis, he did not discharge service tax; that he was not aware that a sub contractor is liable to pay service tax; that he collected Rs 1,44,904.00 @12.24% for the period 2007 08 and Rs.14,49,484.00 @12.36% for the period 2008-09 (till Oct 2008); that he would pay the service tax amount by December 2008 after rechecking his liability and agreed to submit VAT returns and balance sheet on 05.12.2008. 4.11 On verification of sample work order bearing number 8450/112 dated 07/04/2007, issued by M/s Gammon India Limited in favor of the appellant, it is observed that as per Clause/ Condition No. 23 of the said contract, "Sub-Contractor has agreed that the service tax is included in his offer and so no claim whatsoever s....
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....e appeals is whether Section 11AC of the Central Excise Act, 1944 (in short the "Act') inserted by Finance Act, 1996 with the intention of imposing mandatory penalty on persons who evaded payment of tax should be read to contain mens rea as an essential ingredient and whether there is a scope for levying penalty below the prescribed minimum. Before the Division Bench, stand of the revenue was that said section should be read as penalty for statutory offence and the authority imposing penalty has no discretion in the matter of imposition of penalty and the adjudicating authority in such cases was duty bound to impose penalty equal to the duties so determined. The assessee on the other hand referred to Section 271(1)(c) of the Income Tax Act, 1961 (in short the IT Act') taking the stand that Section 11AC of the Act is identically worded and in a given case it was open to the assessing officer not to impose any penalty. The Division Bench made reference to Rule 96ZQ and Rule 96ZO of the Central Excise Rules, 1944 (in short the "Rules') and a decision of this Court in Chairman, SEBI v. Shriram Mutual Fund & Anr. [2006 (5) SCC 361] and was of the view that the basic scheme for impositio....