2015 (12) TMI 1319 - AT - Service Tax

Waiver of pre deposit - Recovery of tax by way of pre deposit - Revenue neutrality - Held that - The partnership firm M/s. SKB entered into contract with the land owner and execution of the constructionwork was entrusted to the company M/s. SKBDPL. Service tax law is very specific prescribing incidence of tax on the service provider who provides taxable services except the cases of reverse charge mechanism levy. Keeping the provisions of the enactment in view and modus operandi of the parties, without prejudice to the grounds of appeal of the appellants, appellant SKBDL is directed to deposit ₹ 20,00,000 within four weeks - Partial stay granted.

Summary

Issues: Liability of a company when a partnership firm pays tax, revenue neutrality due to relationship between parties, waiver of pre-deposit during appeal.

The judgment addresses the issue of liability when a partnership firm pays tax, arguing that there should be no liability on the company since all directors are partners in the firm, ensuring revenue neutrality due to their relationship as builders and contractee. The tribunal considers the modus operandi between the parties, noting that the service tax law imposes tax on the service provider, except in cases of reverse charge mechanism levy. The tribunal directs the company to deposit a specific amount within a given timeframe, with a waiver of pre-deposit for the balance demand during the appeal process, subject to compliance. The partnership firm's adjudication order shows an appropriation against the tax demand, leading to a waiver of pre-deposit for the balance demand until the appeal's disposal. Ultimately, both stay applications are disposed of according to the specified terms.