TaxTMI 
TaxTMI 
2024 (4) TMI 1326
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....ices provided by the Appellant to MGI Infra in the nontaxable territory of Jammu & Kashmir and hence the same were exempted from payment of Service Tax. On the basis of certain inquiries conducted by the Department, a Show Cause Notice [SCN] dated 30.09.2015 was issued to the Appellant proposing to demand service tax amounting to Rs.59,26,161/- and to impose penalty under Section 76, 77(1)(a), 77(2) & 78 of the Finance Act, 1994. Reply to the SCN was filed by the Appellant. The learned Adjudicating Authority vide the Order-In-Original dated 31.03.2017 confirmed the demand as proposed in the SCN and also imposed penalty of Rs.10,000/- each under Section 77(1) & 77(2) and penalty of Rs.59,26,161/- under Section 78 of the Finance Act, 1994. Being aggrieved the Appellant filed appeal before the First Appellate Authority. The learned Commissioner (Appeals) vide the impugned Order-In-Appeal upheld the confirmation of demand of Service Tax of Rs.59,26,161/- and imposition of penalty under Section 77(1) and 77(2). However, the penalty imposed under Section 78 was reduced to 33,67,989/-. Aggrieved, Appellant has filed the present appeal before the Tribunal. 3. It is the case of the Appel....
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....y the Appellant 96,78,945 4. Total service tax liability deposited by Indwell 19,45,052 6. The amount of Rs.96,78,945/- paid by the Challans is under:- Sl. Challan No. Date Amount 1 00512 5.1.2014 15,01,990/- 2 13603 25.3.2014 6,68,644/- 3 14781 5.5.2014 19,19,227/- 4 14910 5.1.2014 8,33,198/- 5 10519 31.3.2014 4,32,542/- 6 14968 5.5.2014 2,08,551/- 7 14869 5.6.2014 2,15,480/- 8 26192 5.8.2014 1,58,404/- 9 00311 6.9.2014 1,45,745/- 10 01965 5.10.2014 1,41,068/- 11 15327 5.11.2014 1,85,562/- 12 13547 5.12.2014 2,26,654/- 13 26758 5.1.2015 2,88,864/- 14 14734 5.2.2015 1,75,952/- 15 03135 6.3.2015 1,84,626/- 16 63533 31.3.2015 1,32,243/- 17 05080 5.5.2015 35,34,403/- 18 72204 3.12.2015 3,28,961/- 19 21975 5.2.2016....
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....for the period was discharged thereafter, which shows that the essential ingredients of proviso to Section 73 are not specified in the present case. 12. In view of the above discussions, the impugned order cannot be sustained and is accordingly set aside. The appeal filed by the Appellant is allowed with consequential relief, as per law. Sd/- (P.K. CHOUDHARY) MEMBER (JUDICIAL) Sd/- (SANJIV SRIVASTAVA) MEMBER (TECHNICAL) (SEPARATE ORDER) PER : SANJIV SRIVASTAVA: I have perused the order prepared by the learned brother. However after even after long hours of persuasion I am not in position to agree with the same. 2. The issue in respect of liability of the sub-contractor, when the main contractor has been paid the service tax in respect of services of Erection, Commissioning etc. The said issue finally got settled by the Larger Bench of this Tribunal in the case of CST Vs Melange Developers P. Ltd., 2020 (33) GSTL 116 (LB). Accordingly, I do not find any reason, whereby it can be held that service tax liability on sub-contractor could not have been demanded from the appellant. 3. Appellant have claimed the benefit of service tax deposited....
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.... 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 .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. XX XX XX XX XX XX XX XX XX XX XX XX 30. Thus, for all the reasons stated above, it is not possible to accept the contention of the Learned....
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....nt 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 when the main service provider discharged the service tax on gross value there may not be tax liability on the sub-contractor rendering similar service to the main contractor The Tribunal in various cases held in such a case involving interpretation of law and also a bona fide belief regarding service tax liability, will not attract the demand for extended period. We also take note that service tax liability on the appellant when discharged will be available as a credit to RSIC which can be used by RSIC for discharging their overall service tax liability. As such, to impute motivation to the appellant for intention to evade payment of duty is not sustainable. A reference can be made to the Tribunal's decisions in British Airways v. CCE (Adjn.), Delhi reported in 2014 (36) STR. 598....
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....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: TRU letter F. No. 341/18/2004-TRU (Pt.) dated 17-12-2004 -Circular No. 23/3/97-5.T., dated 13-10-1997 - Master Circular No. 96/7/2007-ST dated 23-8-2007 In fact, also from various following decisions of the Tribunal:- -Urvi Construction v. CST, Ahmedabad 2010 (17) S.T.R. 302 (Tri. Ahmd.) = 2009- TIOL-1890-CESTAT-AHM -CCE, Indore v. Shivhare Roadlines - 2009 (16) S.T.R. 335 (Tri.-Del.) =2009-TIOL-526-CESTAT-DEL - Harshal & Company v. CCE, Vadodara - 2008 (12) S.T.R. 574 (Tri.- Ahmd.) -Semac Pvt. Limited v. CCE, Bangalore-2006 (4) S.T.R. 475 (Tri.- Bang.) 2006-TIOL- 1546-CESTAT-BANG Shiva Industrial Security Agency v. CCE, Surat - 2008 (12) S.T.R. 496 (Tri.-Ahmd.) -Synergy Audio Visual Workshop P. Ltd. v. CST, ....
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....tation, the same needs to be recomputed. For the purpose of re-computation matter needs to be remanded back to the Original Authority. 5. During the course of argument appellant have submitted a chart containing the liability of service tax reconciling the demand confirmed against him with the payment of service tax, the same is reproduced below:- SR. NO PARTICULARS AMOUNT 1. TOTAL SERVICE TAX LIABILITY AS CONFIRMED BY APPELLATE AUTHORITY Rs. 59,26,161/- 2. EXEMPTED SERVICES PROVIDED TO MGI INFRA NIPANI IN THE STATE OF JAMMU AND KASHMIR (Rs. 2,76,184) TOTAL TAX LIABILITY AFTER REMOVING EXEMPTED SERVICE Rs. 56,49,977/- 3. CHALLANS BENEFIT OF WHICH NOT GIVEN BY APPELLATE AUTHORITY CHALLAN NO DATE AMOUNT 14910 05.03.2014 Rs.8,33,198/- 10519 31.03.2014 Rs,4,32,542/- 05080 05.05.2015 Rs.3,53,403/- 72204 03.12.2015 Rs.3,28,961/- 21575 05.02.2016 Rs.15,77,831/- Rs. 35,25,935 3. SERVICE TAX DEPOSITED BY INDWELL DURING FY 2010-11 TO 2011-12 Rs. 22,73,643 4. TOTAL SERVICE TAX DEPOSITED Rs. 57,99,578/- Excess service tax deposited Rs. 1,49,601/- 6. In terms of the above chart appellan....
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....sh that these services were provided in respect of Pre Engineer Residential Building at Narwal Bala Jammu (J & K). As the matter is being remanded back to original authority he should take note of this work order while recomputing the demand if any. 8. Appellant have claimed that authorities below have not taken note of four challans by which they have already deposited service tax of Rs.35,25,935/- In the remand proceedings authorities should verify the claim made by the appellant for recomputing the demand if any. 9. Appeal is partly allowed, matter is remanded back to the Original Authority for re-computation as indicated in para no.4,7 & 8 above. Sd/- (SANJIV SRIVASTAVA) MEMBER (TECHNICAL) POINTS OF DIFFERENCE In view of the difference in the opinion recorded by Member (Judicial) and the Member (Technical), following question is referred to Hon'ble President for referring to Third Member,- (i) Whether on issue in respect liability of sub contractor to pay service tax,- the demand should be quashed following the decisions of Tribunal in case of Shivhare Roadlines [2009 (16) STR 335 (TDel)] and JAC Air Services Pvt Ltd. [2013 (31) STR 155 (T....
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....are also liable to service tax. In that view, it was held that the sub-contractor shall not be doubly taxed if the principal-contractor has already paid the duty amount. 4. The issue whether a sub-contractor is liable to pay service tax even if the main contractor has discharged the service tax liability on the gross amount was considered by the Larger Bench (Melange Developers) in view of the conflicting decisions of the various Division Benches of the Tribunal. The Larger Bench considering the earlier decisions and the provisions of the Act and also the Master Circular dated 23.08.2007 decided the reference that 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. Once the decision has been rendered by the Larger Bench, judicial discipline demands that the same shall be followed in all the subsequent cases. I am, therefore, of the opinion that the said decision is binding and has to be followed in the present case as well as in all the future cases unless a decision contrary to that is rendered by a higher forum. As has already been hel....
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....[2013 (288) ELT 161 (S.C.)], where the Court was concerned with the invocation of extended period under Section 28 of the Customs Act and it was observed the conclusion that mere nonpayment of duties is equivalent to collusion or willful misstatement or suppression of facts is untenable. The relevant portion of the judgement is reproduced below:- "12. .......In our opinion, the main body of the Section, in fact, contemplates ordinary default in payment of duties and leaves cases of collusion or wilful misstatement or suppression of facts, a smaller, specific and more serious niche, to the proviso. Therefore, something more must be shown to construe the acts of the appellants as fit for the applicability of the proviso." 7. With reference to the concept of suppression which has been used in the proviso to Section 11A of the Act, the Supreme Court in Continental Foundation Joint Venture versus Commissioner of Central Excise, Chandigarh [2007(216) ELT 177 (SC)] observed that it has been accompanied by very strong words as "fraud" or "collusion" and therefore has to be construed strictly. Mere omission to give correct information is not suppression of facts, unless it was d....
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....der such belief of the assessee, a malafide belief particularly when such a belief was emanating from the view taken by the decision of the Tribunal. It was further observed that in such cases of dispute of interpretation of legal provisions, it would be totally unjustified to invoke the extended period of limitation by considering the assessee's view to be lacking bonafides. In this context, the Court noticed that the assessee who is required to self assess his liability, determined the assessable value on the basis of an interpretation given by CESTAT in its order dated 28.07.2000 and therefore, it could not have foreseen that the view taken by the Tribunal would be upset and overturned by the Supreme Court. In the circumstances, it was concluded that the assertion that there was suppression of facts is therefore clearly untenable. 10. The learned counsel for the appellant has relied on the decision of the Chandigarh Bench of the Tribunal in the case of M/s. Vishal Engg. Company [Final Order No.60175 of 2023 dated 5.7.2023], where the issue whether in such cases, the extended period of limitation can be invoked or not was considered and referring to the earlier decisions of th....