2018 (6) TMI 1530 - AT - Central Excise

Liability of Service tax - Sub-Contract - M/s UPL, principal contractor is paying service tax liability in respect of such contracts under which work was executed by the appellant - Held that - The appellant have taken a categorical stands that their principal contractor for whom they were working as Sub-contractor has already discharged full tax liability on the full value of the contract. The appellant is only a sub-contractor and second time tax liability cannot be fastened upon him - As per the settled law if the service tax stands paid on the full value by main contractor, no further liability would arise against the present appellant. Appellant had produced certificate from principal contractors to the effect that he has paid the entire tax - Inasmuch as the Revenue is disputing the said fact, it is fit to set aside the impugned order and remand the matter to the Original Adjudicating Authority for verification of the said factual position - appeal allowed by way of remand.

Summary

Issues:
1. Appellant's liability for service tax as a sub-contractor.
2. Validity of certificate provided by the main contractor regarding tax payment.
3. Dispute over the payment of service tax on the services rendered.

Analysis:
The judgment by the Appellate Tribunal CESTAT ALLAHABAD involved a case where the appellant, working as a sub-contractor to a main contractor, was contesting their liability to pay service tax. The main contractor had already paid service tax to the Revenue for the services provided by the appellant. The appellant argued that they should not be held liable for the tax again as the main contractor had discharged the full tax liability for the entire contract. The appellant presented a certificate from the main contractor confirming the tax payment. However, the Revenue disputed this claim, stating that the payment made by the main contractor could not be directly linked to the services provided by the appellant.

The Tribunal noted the appellant's submission that they were following the instructions of the main contractor regarding the payment of tax and that they were not aware of the legal procedures. The Tribunal decided to remand the matter to the Original Adjudicating Authority for verification of the factual position regarding the tax payment by the main contractor. The Tribunal emphasized that if the service tax had already been paid by the main contractor on the full value of the contract, the appellant should not be held liable for any additional tax. Therefore, the appeal was allowed by way of remand for further verification and clarification on the tax payment issue.

In conclusion, the judgment highlighted the importance of verifying the tax payment status by the main contractor to determine the appellant's liability as a sub-contractor. The Tribunal emphasized the need for proper documentation and evidence to establish the tax payment status and reiterated that if the service tax had been paid in full by the main contractor, the sub-contractor should not be subjected to additional tax liability.