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2016 (9) TMI 844 - AT - Service TaxDemand alogwith interest and penalty - service tax payable on Management, Maintenance and Repair (MMR) service for the period 10/2007 to 3/2008 and ECIS rendered by appellant - appellant had discharged the entire service tax liability under MMR service along with interest prior to issuance of show-cause notice - main contractor has discharged the service tax liability for ECIS service rendered to the client - Held that - we are convinced and satisfied with the arguments put forward by the appellants to conclude that the demand of service tax for ECIS services is not sustainable as the main contractor has discharged the service tax liability. So also as the appellant had paid service tax in regard to MMR services before issuing the show-cause notice, no penalty can be imposed in this regards. Cumulatively, all penalties imposed in the impugned order are unsustainable and liable to be set aside. The demand and interest of service tax on ECIS is set aside for the reason that the main contractor has discharged the liability. - Decided partly in favour of appellant with consequential relief
Issues:
1. Service tax demand on Management, Maintenance & Repair Services (MMR) 2. Service tax demand on Erection, Commissioning and Installation Services (ECIS) 3. Interest and penalties imposed Analysis: 1. The appellant contested the demand of &8377; 8,80,590/- for service tax on MMR services for the period 10/2007 to 3/2008. The appellant argued that they had already paid the service tax liability along with interest before the show-cause notice was issued, citing Section 73(3) of the Finance Act, 1994. The counsel relied on precedents like C Ahead Info Technologies India Pvt. Ltd. Vs. CCE(A), Bangalore-II and CCE & ST, LTU, Bangalore Vs. Adecco Flexione Workforce Solution Ltd. The Tribunal agreed with the appellant, setting aside the demand and penalties related to MMR services. 2. The second demand of &8377; 2,09,63,859/- for ECIS services was challenged by the appellant, arguing that as a sub-contractor, they should not be liable for service tax when the main contractor has already paid. Precedents such as Visesh Engineering Co. Vs. CCE and Nana Lal Suthar Vs. CCE were cited. The Tribunal concurred with the appellant, stating that since the main contractor had discharged the service tax liability, the demand on the appellant was not sustainable. Therefore, the demand and interest for ECIS services were set aside. 3. The penalties imposed, including under Sections 77, 78, and 76 of the Finance Act, 1994, were deemed unsustainable by the Tribunal. It was concluded that no penalty could be imposed for MMR services due to prior payment of service tax, and the demand for ECIS services was set aside as the main contractor had already paid the liability. Consequently, all penalties were set aside, and the impugned order was modified accordingly, partially allowing the appeal with consequential reliefs. In conclusion, the Tribunal ruled in favor of the appellant, setting aside the service tax demands and penalties related to both MMR and ECIS services, based on the arguments presented and the legal precedents cited.
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