2015 (8) TMI 162 - AT - Service Tax

Demand of service tax - sub-contractor - Exemption as per CBEC Circular No. 96/7/2007-ST dated 23.08.2007 - Service tax on entire contract value - Held that - Facts of the present case are similar to the facts in the case of National Building Construction Corpn. Limited vs. CCE & ST, Patna (2011 (5) TMI 399 - CESTAT, KOLKATA) relied upon by the appellant, where the sub-Contractor was having a contract with NBCC who in turn was the main contractor and providing services to M/s. NTPC. M/s. NBCC (main contractor) had paid the Service Tax of the entire contract value between M/s. NBCC and M/s. NTPC. It was held that sub-Contractor has not rendered direct Service to M/s. NTPC and if any tax was paid by the Sub-Contractor the same was available as credit to NBCC and that was held to be a case of revenue neutrally and that no tax is demandable from the Sub-Contractor. - On the basis of the same ratio if the main contractor has paid Service Tax of the entire contract value, including the value for which contract was given to the present appellant then no Service Tax is required to be paid by the appellant due to revenue neutrality - Matter remanded back - Decided in favour of assessee.

Summary

Issues:
- Whether the sub-contractor is liable to pay Service Tax when the main contractor has already paid it on the entire contract value?
- Whether the service provided by the sub-contractor is different from the service provided by the main contractor?
- Whether double taxation is applicable in this case?

Analysis:
The appellant, a sub-contractor, filed a stay application and appeal against an order dated 05.03.2013, where the main contractor had paid Service Tax on the entire contract value. The appellant argued that only a part of the total contract, already taxed by the main contractor, was further contracted to them. The appellant cited relevant case laws to support the argument of no Service Tax liability for the sub-contractor up to a certain date. The Revenue contended that the services provided by the sub-contractor were distinct from those of the main contractor, allowing for Service Tax payment by the sub-contractor, which could be claimed as Cenvat credit by the main contractor.

Upon reviewing the case records and considering precedents, the Tribunal found similarities with a previous case where it was held that if the main contractor had paid Service Tax on the entire contract value, including the portion contracted to the sub-contractor, no tax liability was applicable to the sub-contractor due to revenue neutrality. Referring to another case, the Tribunal recommended a set-off mechanism if the main contractor paid Service Tax, indicating no additional tax liability for the sub-contractor. Consequently, the Tribunal remanded the matter to verify if the main contractor had indeed paid Service Tax on the entire contract value, including the sub-contractor's portion, emphasizing the principle of revenue neutrality and natural justice.

In conclusion, the Tribunal allowed the appeal by way of remand, directing the adjudicating authorities to ensure no Service Tax liability for the sub-contractor if the main contractor had already paid taxes on the entire contract value, including the sub-contractor's portion. All issues were left open for further deliberation by the adjudicating authority, maintaining fairness and adherence to legal principles.