2014 (10) TMI 385 - AT - Service Tax

Commercial and industrial constructions services - manpower supply services - sub contractor - Notification No. 16/2005-ST dated 07/06/2005 - Held that - There is no provision in law exempting the sub-contractor from payment of service tax either by way of exemption notification or otherwise. Further, this Tribunal in the case of Sunil Hi-Tech Engineers Ltd. (2014 (10) TMI 524 - CESTAT MUMBAI (LB)) and also a Larger Bench of this Tribunal in the case of Vijay Sharma & Co. Vs. CCE, Chandigarh - 2010 (4) TMI 570 - CESTAT, NEW DELHI held that sub-contractors are also liable to pay service tax, notwithstanding the fact that the main contractor might have discharged the service tax liability. Therefore, this contention of the appellant is not tenable. As regards the exemption under Notification No. 16/2005, the said exemption is provided on Commercial or Industrial Construction Services undertaken in relation to construction of port or other port. From the work order dated 22/02/2006 given to the appellant by M/s. Punj Lloyd Ltd., the main contractor, it is seen that it was for supply of skilled man-power and the consideration was paid based on the skilled manpower supplied on a monthly rate. Thus, the appellant has rendered the services of supply of skilled man-power and not commercial or industrial construction services . Therefore, the appellant is prima facie not eligible for the benefit of Notification No. 16/2005. Thus, the appellant has not made out a prima facie case for grant of stay - Partial stay granted.

Summary

Issues:
Service tax demand confirmation, liability of sub-contractor for service tax payment, applicability of exemption under Notification No. 16/2005-ST, financial hardship plea for stay.

Service Tax Demand Confirmation:
The appeal and stay petition challenge an order confirming a service tax demand against the appellant for providing "commercial and industrial constructions services" and "manpower supply services." The appellant argues that the main contractor discharged the duty liability, making the sub-contractor not liable for service tax. However, the Tribunal has previously held that sub-contractors are also liable for service tax, regardless of the main contractor's actions. The appellant's contention is deemed invalid.

Liability of Sub-contractor for Service Tax Payment:
The Tribunal rejects the appellant's claim that as a sub-contractor, they are not liable to pay service tax due to the main contractor's discharge of the duty liability. Previous judgments have established that sub-contractors are obligated to pay service tax, irrespective of the main contractor's actions. Therefore, the appellant's argument is dismissed.

Applicability of Exemption under Notification No. 16/2005-ST:
The appellant sought exemption under Notification No. 16/2005-ST for services related to the construction of a port. However, the Tribunal found that the appellant provided skilled manpower services, not "commercial or industrial construction services" as required for the exemption. Consequently, the appellant was deemed ineligible for the exemption, failing to establish a prima facie case for a stay.

Financial Hardship Plea for Stay:
The appellant failed to provide evidence of facing financial hardship when queried by the Bench. As a result, the plea for financial hardship was not accepted. The Tribunal directed the appellant to make a pre-deposit of the balance of service tax within eight weeks. Compliance would result in the waiver of interest and penalty, with recovery stayed during the appeal's pendency.

This detailed analysis of the judgment highlights the issues of service tax demand confirmation, the liability of sub-contractors for service tax payment, the applicability of an exemption under Notification No. 16/2005-ST, and the rejection of a financial hardship plea for a stay, providing a comprehensive understanding of the legal decision.