2018 (2) TMI 1121 - AT - Service Tax

Advertising Service - non-payment of service tax - Held that - the service Tax in respect of the services provided by the appellant had already been discharged by the main advertiser. Hence, it is not the case of non-payment of tax by the appellant for providing the taxable service. Chandigarh Bench of the Tribunal in the case of Lone Star Engineers 2016 (9) TMI 489 - CESTAT CHANDIGARH have held that the payment of main contractor on behalf of the appellant shall be treated as payment made by the appellant. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Liability of the appellant to pay Service Tax despite the main advertiser already discharging the tax.
2. Interpretation of relevant legal provisions and precedents regarding the payment of Service Tax by subcontractors.

Analysis:

Issue 1: Liability of the appellant to pay Service Tax despite the main advertiser already discharging the tax.
The case involved the appellant, a sub-contractor registered under the taxable category of Advertising Service, who received a portion of the consideration from the main advertiser, M/s Rajasthan Samwad. The main advertiser had already paid Service Tax on the entirety of the consideration received, including the portion passed on to the appellant. The Department proceeded against the appellant for non-payment of Service Tax, despite the main advertiser discharging the tax liability. The Tribunal noted that the Adjudicating Authority confirmed that the main advertiser had indeed paid the Service Tax on the commission received, and any further levy on the appellant would amount to double taxation, which is impermissible under the law. The Tribunal referred to previous decisions, including the case of Vijay Sharma and Company, which held that the payment made by the main contractor on behalf of the appellant should be considered as payment made by the appellant. Therefore, the Tribunal concluded that the appellant was not liable to pay Service Tax again on the amount already taxed by the main advertiser.

Issue 2: Interpretation of relevant legal provisions and precedents regarding the payment of Service Tax by subcontractors.
The appellant argued that since the main advertiser had discharged the Service Tax liability for the services provided by the appellant, there was no need for the appellant to pay tax again. The appellant relied on the decision of the Larger Bench of the Tribunal in the case of Vijay Sharma and Company, along with another case precedent. On the other hand, the Revenue contended that the appellant, as the provider of the taxable service, was still liable to pay tax on the service provided. The Tribunal analyzed the submissions from both sides and examined the findings of the Adjudicating Authority, which confirmed that the main advertiser had paid the Service Tax on the commission received. The Tribunal distinguished the case cited by the Revenue and emphasized that the decision in that case was not applicable to the present situation. Ultimately, the Tribunal found in favor of the appellant, setting aside the impugned order and allowing the appeal.

In conclusion, the Tribunal ruled in favor of the appellant, holding that the appellant was not liable to pay Service Tax again on the amount already taxed by the main advertiser. The decision was based on the principle of avoiding double taxation and the interpretation of relevant legal provisions and precedents regarding the payment of Service Tax by subcontractors.