2017 (9) TMI 917 - AT - Service Tax

Sub-contract - case of appellant is that the appellants being sub-contractors, they are not liable to pay service tax as the main contractor has discharged the service tax - extended period of limitation - penalty - Held that - the issue whether the appellants being a sub-contractor is liable to pay service tax when the main contractor has discharged the service tax is neat question of law, which needs to be considered. On perusal of the orders of both the lower authorities, we find that this vital legal issue has not been considered - the matter needs to be remanded - appeal allowed by way of remand.

Summary

Issues:
- Whether sub-contractors are liable to pay service tax when the main contractor has already paid?
- Consideration of limitation period in the case.
- Relevance of various judgments cited by the appellant.
- Need for remand to the adjudicating authority for further consideration.

Analysis:
The appellant, represented by Shri V.S. Sejpal, argued that the adjudicating authority had passed an ex-parte order without considering crucial aspects. It was contended that as sub-contractors, they are not liable to pay service tax if the main contractor has already discharged the tax, citing a circular up to a specific date. The appellant raised concerns about the limitation period and the need for a reevaluation based on facts and legal considerations. An amount of &8377; 36,000 for a period post the specified date was acknowledged and paid by the appellant. Several judgments were referenced to support the appellant's position, emphasizing the need for a detailed reconsideration of the issues.

The Revenue, represented by Shri V Dwivedi, reiterated the findings of the impugned order without providing additional arguments.

Upon reviewing the submissions from both parties, the Tribunal, comprising Mr. Ramesh Nair and Mr. Raju, found that the question of whether sub-contractors are liable to pay service tax when the main contractor has already fulfilled the obligation is a significant legal issue requiring thorough examination. The Tribunal noted that this crucial aspect had not been adequately addressed by the lower authorities, necessitating a remand for further consideration. The Tribunal acknowledged the relevance of the judgments cited by the appellant and emphasized the need to factor them into the denovo adjudication process. The issue of limitation was also deemed unresolved and left open for future deliberation.

Ultimately, the Tribunal allowed the appeal by remanding the case back to the adjudicating authority for a comprehensive reconsideration of the legal issues raised, including the liability of sub-contractors to pay service tax and the applicability of the limitation period. The decision was pronounced in court on 31/07/2017.