2011 (3) TMI 925 - AT - Service Tax

Service tax liability - Assessee contention is that such sub contracted services are not required to discharge separate service tax when the principal contractor has already discharged the service tax on the entire value - Revenue submits that in view of the certificate now being produced by the appellant, it has to be verified as to whether the principal contractor has paid the service tax on the entire amount or not - Thus, the impugned order set aside and remand the matter to the original adjudicating authority for fresh decision to verify the certificate given by the principal as regards payment of service tax on the entire value. Demand - management consultancy services provided prior to 01.08.02 - The appellant s contention is that such services were not liable to tax prior to the said date in view of the Notification No.59/98 dated 16.10.98 and Notification No.15/2002 dated 01.08.02. For the above proposition they have relied upon the decisions of the Tribunal in case of Sridhar & Santhanam Vs. CCE (2008 -TMI - 33123 - CESTAT CHENNAI) - Therefore, direct the original adjudicating authority to re-decide the issue in the light of the law declared in the above judgments - Thus, the appeal is disposed off.

Issues:
1. Confirmation of service tax demand against the appellant for the period 2000-2002 to 2004-2005.
2. Applicability of service tax on sub-contracted services when the principal contractor has already paid the tax.
3. Verification of certificate regarding payment of service tax by the principal contractor.
4. Confirmation of demand for management consultancy services provided prior to 01.08.02.
5. Consideration of the appellant's plea of limitation.

Analysis:

1. The judgment confirms the demand of service tax against the appellant, a Chartered Accountant Firm, for the period 2000-2002 to 2004-2005. The tax amount confirmed is Rs.20,09,803 for services provided on a sub-contract basis to their principal Chartered Accountant firm. The appellant argued that the principal contractor had already paid service tax on the gross value, including the payment made to the appellant. The matter was remanded to verify the certificate provided by the principal regarding the payment of service tax on the entire value.

2. The appellant contended that sub-contracted services do not require separate service tax payment if the principal contractor has already discharged the tax on the entire value. The appellant cited various circulars and decisions in support of their argument. The Tribunal set aside the impugned order and remanded the matter to the adjudicating authority to reconsider in light of the referred judgments and verify the certificate provided by the principal contractor.

3. A demand of Rs.41,871 was confirmed against the appellant for management consultancy services provided before 01.08.02. The appellant argued that such services were not taxable before the said date based on specific notifications. The Tribunal directed the original adjudicating authority to re-decide the issue considering the judgments cited by the appellant and also to evaluate the plea of limitation raised by the appellant.

4. The judgment highlights the importance of verifying the payment of service tax by the principal contractor and re-evaluating the tax liability on sub-contracted services. The decision emphasizes the need for a fresh examination of the issues raised by the appellant in light of relevant circulars, notifications, and judicial precedents.

5. The judgment ultimately disposed of the appeal, indicating a comprehensive approach to re-examining the tax liabilities and considering the appellant's arguments regarding service tax demands and management consultancy services provided before specific dates. The decision underscores the significance of legal provisions, circulars, and judicial decisions in determining tax liabilities and resolving disputes effectively.

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