2008 (2) TMI 371 - AT - Service Tax

Applicant provider of security services - applicant submits that applicant is a sub-contractor and as per the agreement the main contractor was required to pay the service tax and that the same has been paid by them - Since the service tax stands paid already by the main contractor there was no question of demanding again from applicant - If any pre-deposit is ordered it will amount to ordering recovery of service tax twice on the same services - prima facie strong case for complete waiver

Summary

Issues:
1. Liability of service tax on the appellant for security services provided.
2. Claim of the appellant as a sub-contractor exempt from service tax.
3. Interpretation of Trade Notice No. 5/98-Service Tax in relation to the case.
4. Commissioner's findings on the applicability of the clarification to security agencies.
5. Consideration of evidence regarding payment by the main contractor.
6. Prima facie assessment of the payment of service tax by the main contractor.
7. Decision on the stay petition and waiver of dues for the appellant.

Analysis:
1. The appellant, a provider of security services, received a significant sum from a company but did not pay the service tax on it. The Commissioner confirmed a demand for the tax amount and imposed penalties under various sections of the Finance Act, 1994.

2. The appellant argued that they were a sub-contractor, and the main contractor was responsible for paying the service tax, which they claimed had already been done by the main contractor. Citing a trade notice and several decisions, the appellant contended that they should not be liable for the tax or penalties.

3. The appellant relied on Trade Notice No. 5/98-Service Tax, which exempts sub-contractors from paying tax if the principal party has already done so, citing similar decisions in support of their claim.

4. The Commissioner, however, maintained that the trade notice's clarification applied to specific services and could not be extended to security agencies, reiterating the findings against the appellant.

5. The Tribunal reviewed the evidence, noting statements and letters indicating that the main contractor had indeed paid the service tax related to the appellant's services, leading to a prima facie observation that the tax amount had been settled with the government.

6. Considering the risk of double recovery of service tax on the same services, the Tribunal found a strong case for waiving the dues for the appellant and granted an unconditional stay on the demand, scheduling a final hearing for further proceedings.

7. The Tribunal's decision on the stay petition was based on the prima facie assessment of the payment situation, ensuring fairness and avoiding double taxation for the appellant, setting the stage for a final resolution in the upcoming hearing.