2018 (4) TMI 1405 - AT - Service Tax

Construction services - Demand of service tax on the basis of TDS deducted - Form No. 26AS - agreement with M/s Ansal Housing & Construction Ltd. for doing some tubewell boring work - Held that - although appellant has used PAN card of Sh. Hari Singh, contractor to obtain the contract from M/s Ansal Housing & Construction Ltd. but it is a fact on record that Sh. Hari Singh contractor was during other contracts with the other services recipients and during the course of investigation, no statement of Sh. Hari Singh was recorded to establish the fact that whether Sh. Hari Singh executed the work in question or the appellant has executed all the works mentioned in the Form No. 26AS issued to Sh. Hari Singh who was the contractor - the demand of service tax is not sustainable against the appellant, as appellant falls within exemption limit of ₹ 10 lakhs - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Appeal against demand of service tax under construction services category.
- Validity of demand based on Form No. 26AS.
- Appellant's liability for service tax under exemption limit.

Analysis:
1. The appellant appealed against an order confirming a service tax demand under construction services. The appellant had entered into an agreement for tubewell boring work with a company, using another contractor's permanent account number to secure the contract. The investigation alleged that payments received by the contractor actually pertained to the appellant, leading to the service tax demand. The appellant contended that the demand based on Form No. 26AS of the contractor was incorrect as the contractor had other unrelated contracts, and no effort was made to verify the actual work done by either party.

2. The appellant, represented by a consultant, argued that as a small shopkeeper, he had obtained a contract for tubewell boring and used the contractor's PAN card due to not having his own. The appellant highlighted discrepancies in attributing the received amounts solely to him, emphasizing that the contractor had other independent works. The appellant challenged the demand on the grounds of lack of proper investigation and evidence linking the payments to him.

3. The Assistant Commissioner supported the original order, asserting that since the appellant used the contractor's PAN card and not his own, the amounts received should be included in the assessable value for service tax. However, upon hearing both parties and evaluating the submissions, the tribunal found that the demand was unsustainable. Despite using the contractor's PAN card, the lack of evidence linking the payments to the appellant, coupled with the appellant falling within the exemption limit for service tax liability, led to the order being set aside in favor of the appellant.

4. The tribunal noted that no statements from the contractor or other service recipients were obtained to clarify the actual work done. Additionally, the appellant's bank statements showed amounts below the exemption limit over four years. Consequently, the tribunal ruled in favor of the appellant, setting aside the impugned order and allowing the appeal with consequential relief.