2017 (2) TMI 1151 - AT - Service Tax

Liability of tax - who is the person liable for payment of service tax for the services rendered by PWCDA, London to KPTCL? - whether the appellants office in India can be considered as the local address of the appellants subsidiary in London? - Held that - Since PWCDA London is a non-resident service provider, in terms of the CBEC circular, the service receiver in India is liable to pay service tax. Since the appellant is not the service receiver, liability for service tax payment cannot be enforced on them. The position does not change because of the fact that the appellant was earlier discharging such service tax liability as per the authorisation given in their favor by the subsidiary company upto its withdrawal on 27.10.2003 - demand of service tax made on the appellant is without justification. The demand has also arisen on account of the inability on the part of the appellant at the time of investigation to produce the original documents such as invoices and TR 6 challans evidencing the payment of service tax. The appellant has submitted that there are now in a position to submit the original documents for verification. Since the learned DR has also no objection, we remand the matter to the original adjudicating authority for verification of the original documents. Appeal allowed in part and part matter on remand.

Summary

Issues:
1. Liability for service tax payment by the appellant in relation to services provided by its subsidiary, PWCDA, London to KPTCL.
2. Demand of service tax amounting to ?24.49 lakhs and ?46.26 lakhs for services rendered by PWCDA and ERP/SAP services respectively.

Analysis:

Issue 1: Liability for service tax payment by the appellant
The appellant, a Management Consultant, was alleged to have evaded service tax payment by suppressing the value of taxable services provided by its subsidiary, PWCDA, London. The demand of ?24.49 lakhs was based on the services rendered by PWCDA to KPTCL. The appellant argued that as a non-resident service provider, PWCDA should have been liable for service tax payment, not the appellant. The appellant had initially discharged the service tax obligation on behalf of PWCDA until PWCDA withdrew the authorization. The Circular No.59/8/2003 clarified that in such cases, the service receiver in India is liable to pay service tax. The tribunal held that the appellant cannot be considered the service receiver and therefore, the demand on the appellant was unjustified.

Issue 2: Demand of ?24.49 lakhs and ?46.26 lakhs
The demand of ?46.26 lakhs was for ERP/SAP services provided before 10.9.2004. The appellant had difficulty producing original documents at the time of investigation but later claimed to be able to provide them. The tribunal agreed to remand this issue for verification. However, the demand of ?24.49 lakhs was set aside as the appellant was not liable for the service tax payment related to services provided by PWCDA. The tribunal directed the original adjudicating authority to reevaluate the demand of ?46.26 lakhs based on the original documents to be submitted by the appellant.

In conclusion, the tribunal set aside the demand of ?24.49 lakhs and remanded the issue of ?46.26 lakhs for further verification and decision by the original adjudicating authority.