2014 (11) TMI 253 - HC - Service Tax

Levy of service tax on sub-contractor - Waiver of pre deposit - appellant s plea is that the principal contractor RNS Infrastructure Limited have deducted the service tax liability and had paid the same to the Department. - Manpower Recruitment or Supply Agency service - Held that - Appellant has produced relevant documents before the Tribunal as well as before this Court. If the stand of the appellant that the service tax liability is discharged is proved to be correct on the basis of the records furnished, the Department ought to have consider payment of service tax in the light of such statement. This stand is not a new one taken at the first time before the Tribunal, but has been communicated by the principal contractor at the earliest point of time even before the Adjudicating Authority. The appellant is only a civil contractor working under the principal contractor. If records are available with the Department, then there is no reason why the authority should have refused to go into the claim and verify the bona fides of such a plea of payment of service tax. At this point of time, we are not testing the merits of the documents furnished, namely, ST-3 returns and other connected documents. But that will be a prima facie material for us to consider that the issue requires to be properly considered by the Department in the light of what has been stated on 04.10.2010 and supported by the documents. If it is found true, then the consequence will flow therefrom. - Tribunal to verify the claim - stay order of tribunal directing the assessee to deposit entire amount of service tax modified and stay granted partly.

Issues:
1. Service tax liability on the taxable service provided by the appellant.
2. Discrepancy in the payment of service tax by the principal contractor.
3. Adjudication proceedings and imposition of penalty and interest.
4. Appeal before the Commissioner of Central Excise and Tribunal.
5. Pre-deposit requirement and waiver application.
6. Rejection of modification application by the Tribunal.
7. Appeal against the Tribunal's order.
8. Verification of documents and consideration of service tax payment.
9. Bona fide actions of the appellant in discharging service tax liability.
10. Modification of the Tribunal's order for pre-deposit and appeal restoration.

Analysis:
1. The appellant, engaged in supplying laborers, failed to discharge service tax liability for the period 16.6.2005 to 31.3.2010. The issue arose concerning service provided to a specific contractor, with the appellant claiming the principal contractor had paid the service tax, supported by relevant documents.

2. A show cause notice was issued, leading to adjudication confirming the service tax demand, penalty, and interest. The appellant's appeal to the Commissioner and Tribunal ensued, with a focus on pre-deposit requirements and waiver applications.

3. The Tribunal's orders necessitated depositing the entire service tax amount, leading to appeals and modification applications. The appellant argued that the principal contractor had indeed paid the service tax, emphasizing the revenue-neutral nature of the transaction.

4. The High Court noted the appellant's submission of relevant documents and the plea regarding the principal contractor's service tax payment. The Court emphasized the need for the Department to consider the payment based on the evidence provided and the contractor's communication.

5. Recognizing the appellant's compliance in discharging service tax for other contracts, the Court highlighted the confusion arising from the principal contractor's claim of payment. The Court directed the Tribunal to verify the records and consider the appellant's claim regarding the principal contractor's payment.

6. Ultimately, the Court modified the Tribunal's order, reducing the pre-deposit amount and restoring the appeal, emphasizing the need for proper verification and consideration of the appellant's claim regarding the principal contractor's service tax payment.

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