TaxTMI 
TaxTMI 
2026 (5) TMI 1092
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....atel & Co who has discharged the service tax liability. They have not collected any service tax from the principal contractor. The Revenue relying on master Circular No. 999.03 dated 23rd August, 2007 which provided that a subcontractor who is essentially a service provider also has to pay the service tax as services provided by him to the main service provider for completion of his work, are in the nature of input service. Service tax is, therefore, leviable on any taxable service provided, whether or not the services are provided by a person in his capacity as a sub-contractor and whether or not such services are used as input service. 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 provider. After completing enquiry, Revenue issued a show cause notice dated 30thAugust,2018 to the appellant demanding service tax of Rs.79,33,872/- under Proviso to sub-section (1) of Section 73 along with interest and also proposed penalty on him under Section 78(1) of the Finance Act, 1994. 1.2 The above show cause notice was decided by the Additional Commissioner vide order dated 30.08.2019, ....
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....rvice tax liability on the sub-contractor where service tax has already been paid by the principal contractor. Demanding service tax again from the sub-contractor amounts to double taxation on same contract(s). When the government has already received tax amount, payment by them and again its Cenvat credit by the principal contractor becomes a revenue neutral situation. They rely on CESTAT Delhi decision in the case of M/s DNS Contractor Vs. Commissioner of Central Excise, Delhi-I 2015 (37) S.T.R. 848 (Tri-Delhi) wherein it has been held that as service tax on the entire contract value has been discharged by the principal contractor, there is no liability of service tax on the sub-contractor. On the same issue, they also rely on the following decisions: - (i) Urvi Construction Vs. Commissioner of Service Tax, Ahmedabad 2010 (17) S.T.R. 302 (Tri.-Ahmedabad) (ii) JAC Air Services Pvt. Ltd. Vs. Commissioner of Service Tax, Delhi 2013 (31) S.T.R. 155 (Tri-Delhi) (iii) M/s KOCH-GLITSCH India Pvt. Ltd. Vs. Commissioner of CEX & Cus. Vadodara-I (Tri-A'bad) (iv) BCC Developers and Promoters Pvt. Ltd. Vs Commissioner of C. Ex,, Jaipur (Tri-Ne....
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....n 30.08.2018. Therefore, it is within the normal period. His case that the issue regarding payment of service tax by the sub-contractor was clarified by CBIC in their circular issued in August, 2007. No doubt, there was a confusion prior to that but after issue of this master circular, there should have been no confusion in anybody's mind that sub-contractor has to pay service tax even though the main contractor has paid the service tax. This is to ensure smooth flow of Cenvat credit. Besides reiterating the findings of the lower authority, he relies on the decision of CESTAT Delhi in the case of Shri Rahul Agarwal Vs. Commissioner of CGST, Customs and Central excise, Jabalpur reported at 2025-TIOL-1368-CESTAT-DEL. He prays that the decision of learned Commissioner (Appeals) may be upheld and the appeal filed by the appellant be set aside. 5. We have heard both the sides. We find that there is no dispute in the facts that the appellant was a sub-contractor of M/s P R Patel & Co. engaged in provision of service. The following points need to be decided in this case:- a) Whether sub-contractor is liable to pay service tax on services provided to a main contractor? ....
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....f electrical and electronic devices, plumbing, drain laying or other installations for transport of fluids, heating, ventilation or air-conditioning including related pipe work, duct work and sheet metal work, thermal insulation, sound insulation, fire proofing or water proofing, lift and escalator, fire escape staircases or elevators; or (b) construction of a new building or a civil structure or a part thereof, or of a pipeline or conduit, primarily for the purposes of commerce or industry; or (c) construction 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 subcontractor through various work orders, had already discharged the Service Tax liability on the entire contract ....
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....e open to a sub-contractor to contend that he should not be subjected to discharge the Service Tax liability in respect of a taxable service when the main contractor has paid Service Tax on the gross amount, more particularly when there is no provision granting exemption to him from payment of Service Tax. 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 paid the Service Tax. However, all these Trade Notices/ Instructions/ Circulars/ Communications were superseded by the Master Circular dated 23 August, 2007 issued by the Government of India, Ministry of Finance. The Circular noticed that when Service Tax was introduced in the year 1994 there were only three ta....
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....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 and 66B of the Act. Rule 3(4) further provides that CENVAT Credit may be utilized for payment of Service Tax on any output service. It is for this reason that the Master Circular dated 23 August, 2007 was issued superseding all the earlier Circulars, Clarifications and Communications. 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 subcontractor, providing t....
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....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 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." xxx xxx xxx 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 ....
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....ates, is to be filed by an assessee, the date on which such return is so filed; (b) where no periodical return as aforesaid is filed, the last date on which such return is to be filed under the said rules; (c) in any other case, the date on which the service tax is to be paid under this Chapter or the rules made thereunder; (ii) in a case where the service tax is provisionally assessed under this Chapter or the rules made thereunder, the date of adjustment of the service tax after the final assessment thereof; (iii) in a case where any sum, relating to service tax, has erroneously been refunded, the date of such refund." As due date of filing ST-3 return for the period October 2015 to March2016 was 25th April, 2016, the show cause notice issued on 30.08.2018 for demanding service tax for the period February,2016 to December,2016, is within the normal period of 30 months. Hence, there is no need to invoke extended period in this case for demand of service tax. The Revenue's case therefore, is not hit by limitation. We therefore find that even though show cause notice invokes extended period of limitation in the charging section, the demand is w....