2018 (2) TMI 151 - AT - Service Tax

Management, Maintenance or Repair services - period of dispute is from July 2004 to March 2008 - Held that - The activities undertaken by the appellants in pursuance of the work order is clearly covered by the tax entry as they are involved in management, maintenance of such circuit for which they have obtained consideration from their clients - demand upheld. Liability of service tax as of sub-contractor - Held that - The present work order given to the appellants cannot be considered as a subcontract of such contract given to the main system integrators. As already noted, the system integrators are involved in various activities taxable under various tax entries. The details are not before us. As such, it will not be possible to come to a conclusion that the appellant has only executed the said contract work of a main contract of the same tax entry given to the system integrators. Time limitation - Held that - no tax is paid on the present disputed activity - Extended period demand is sustainable. Penalty - invocation of section 80 - Held that - Section 80 provides for waiver of penalty imposed under Section 78, if the appellants can show reasonable cause. The appellants have pleaded that Wipro has given a certificate of payment of service tax on the whole consideration which is inclusive of consideration paid to the appellants - penalty waived by invoking section 80. Appeal allowed in part.

Issues involved:
Amendment of cause title and address for communication, Service tax liability under Management, Maintenance or Repair services, Appellant's contention of not being involved in management of circuits, Appellant's argument of being a sub-contractor, Appellant's plea of bonafideness for non-payment of service tax, Appellant's plea regarding limitation, Imposition of penalty under Section 78 and invocation of Section 80 for waiver.

Amendment of Cause Title and Address for Communication:
The department filed a miscellaneous application seeking amendment of the cause title due to a change in the department's jurisdiction. The Tribunal allowed the amendment, noting the necessity to update the address for communication in accordance with the department's new jurisdiction.

Service Tax Liability under Management, Maintenance or Repair Services:
The appellant was aggrieved by the Commissioner's order imposing service tax liability for activities related to the procurement and management of leased circuits. The appellant argued that they were not directly managing the circuits but only identifying defects for further action by System Integrators. However, the Tribunal upheld the tax liability, citing the work order's clear mention of managing and maintaining circuits for a consideration per circuit per year.

Appellant's Contention of Not Being Involved in Management of Circuits:
The appellant claimed they were not engaged in managing the circuits directly, as System Integrators were responsible for such activities. They argued that since System Integrators had already paid service tax on the consideration, there should be no double taxation. The Tribunal rejected this argument, stating that the appellant's activities fell under the tax entry covering management, maintenance, or repair services.

Appellant's Argument of Being a Sub-contractor:
The appellant contended that they were merely sub-contractors and should not be held liable for service tax as the main contractors had already paid taxes. However, the Tribunal ruled that the appellant's work order did not qualify as a subcontract, and their tax liability had to be determined based on statutory entries, not on the main contractor's activities.

Appellant's Plea of Bonafideness for Non-payment of Service Tax:
The appellant argued that they believed the consideration was already subjected to service tax by the System Integrators, hence they did not pay taxes. They requested the invocation of Section 80 of the Finance Act, 1994, to set aside the penalty. The Tribunal upheld the tax liability but waived the penalty under Section 80 due to reasonable cause shown by the appellant.

Appellant's Plea Regarding Limitation:
The appellant raised a plea regarding the limitation for the demand of service tax. The Tribunal found the extended period demand sustainable as the appellant had not paid tax on the disputed activity. However, they considered waiving the penalty under Section 78 by invoking Section 80, which provides for penalty waiver if reasonable cause is shown.

This judgment addresses various issues including the amendment of cause title, service tax liability under specific services, appellant's contentions of not being directly involved in certain activities, being a sub-contractor, plea of bonafideness for non-payment of tax, limitation plea, and imposition of penalty under Section 78 with the invocation of Section 80 for waiver. The Tribunal upheld the tax liability but waived the penalty based on reasonable cause shown by the appellant.

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