2016 (6) TMI 1103 - AT - Service Tax

Levy of service tax under the sub-contract agreement - validity of proof of payment of tax by the principal obtained through RTI - The appellant defended the notice contending that the main contractor NGRI has discharged the service tax liability on the amount received from the client and that therefore they are not liable to pay any service tax under the subcontract agreement. - conduct of drilling shot holes, seismic job services and topographical survey - On behalf of Revenue, the learned AR vehemently argued that appellant failed to establish that service tax liability was discharged by the main contractor, NGRI. That the information/reply received under RTI Act from NGRI is not conclusive proof of payment of tax and cannot be accepted Held that - The information / document made available by the Public Information Officer (PIO) is something which is already recorded in the official records of the public office/authority. On receiving application, the PIO just furnishes a copy of the information contained in the records kept in proper custody. Section 3 of RTI Act states that every citizen shall have the right to information and may obtain the same by submitting an application. The information so received shows that NGRI has paid service tax on the same services. The information having been provided by a public office under the provision of Right to Information Act, 2005, I do not find any reason to disbelieve the same. When main contractor has discharged the service tax liability, there can be no demand against the subcontractor for the same services for the same period - Demand set aside - Decided in favor of assessee.

Summary

Issues:
1. Liability of the subcontractor to pay service tax on subcontract charges.
2. Acceptance of information received under RTI Act as evidence of payment of service tax by the main contractor.
3. Discharge of service tax liability by the main contractor.

Analysis:

Issue 1: Liability of the subcontractor to pay service tax on subcontract charges
The appellant, a subcontractor, undertook contract work for drilling shot holes, seismic job services, and topographical survey. The dispute arose when it was alleged that the appellant did not discharge their service tax liability on the amounts received as subcontract charges. The appellant argued that since the main contractor had already paid the service tax on the same services, they were not liable to pay service tax again. The original authority and Commissioner(Appeals) held the appellant liable to pay the service tax, leading to the present appeal.

Issue 2: Acceptance of information received under RTI Act as evidence
The main contention revolved around whether the information received under the RTI Act regarding payment of service tax by the main contractor could be accepted as evidence. The appellant provided details showing that the main contractor had paid service tax on the services rendered, which was supported by information obtained under the RTI Act. The Revenue argued that this information was not conclusive proof of payment and should not be accepted as evidence.

Issue 3: Discharge of service tax liability by the main contractor
The Tribunal considered the information obtained under the RTI Act, which revealed that the main contractor had indeed paid service tax on the services provided by the subcontractor. The Tribunal relied on precedents where it was held that if the main contractor had discharged the service tax liability, the subcontractor would not be liable for the same services during the same period. Therefore, based on the evidence presented and the legal principles established in previous cases, the Tribunal held in favor of the appellant, setting aside the impugned order and allowing the appeal with consequential reliefs.

In conclusion, the Tribunal accepted the information received under the RTI Act as valid evidence of the main contractor's payment of service tax, thereby relieving the subcontractor of the liability to pay service tax on the subcontract charges. The judgment emphasized the importance of verifying such information and following established legal principles in determining service tax liabilities in subcontract agreements.