2018 (7) TMI 28 - AT - Service Tax

Jurisdiction of Commissioner, Raipur - the work in question was executed in the State of Orissa, Bihar and West Bengal i.e. outside the geographical limits of Raipur jurisdiction - Erection, commissioning and installation Services - sub-contract - liability on sub-contractor to discharge duty, when tax once is paid by the Principal - extended period of limitation. Held that - Admittedly, the head office of the appellant exists in Raipur. It is the simultaneous admission that the work executed by the appellant under the impugned work orders is executed at the places in State of Orissa, Bihar and West Bengal. It is the settled law that every person providing all these specified taxable services is required to pay Service Tax. Service Tax being an indirect tax, its burden is to be borne by the person, who received these services but it is to be collected and paid to the Government Exchequer by the service provider - It is also settled that Service Tax is a destination based tax. It is settled that in case the service provider has opted for centralized bill/ accounting system than any Commissionerate where he works or situates, as the case may be, shall have the competent jurisdiction. But if the service provider is regionally registered, the Commissionerate under whose jurisdiction, he is registered, shall have the competent jurisdiction. In the present case, admittedly, the appellant was neither registered centrally nor regionally - The simultaneous facts also remains is that appellant is not the Site Manager but the service provider only and is based at Raipur with no registration under Service Tax. Thus, we find nothing to conclude that Commissioner, Raipur had no jurisdiction. Whether the activity done by the appellant was not of erection and commissioning / installation? - Held that - Admittedly, the appellant had no ownership to the raw-material for the fabrication of stool. Also that stool apparently and admittedly was for enabling mono-rail beam fabrication and thus, was to be fastened to a structure already embedded into the earth. Seen from any of these angles, the stool in the present case falls out of the definition of goods and for the said reason, out of the definition of manufacture in Section 2 (f) of Excise Act - The said conduct of appellant when read with already observed malafide on part of proprietor of appellant about the registration of one of his firm but not of the other, despite both of them being the providers of taxable services that too to the sole recipient i.e. M/s. Larsen Toubro Ltd., amounts to suppression with the sole object of tax evasion. Liability on sub-contractor - Held that - The liability which has been discharged by M/s.Larsen and Toubro is on the gross value of the entire project. Appellant being one of the service provider admittedly, providing taxable services to Larsen Toubro and receiving the service charges from them cannot get absolve his liability towards Service Tax under the pretext of discharge beingmade by the service recipient. Otherwise also, service tax is to be deposited to the Govt. not by the recipient but by the provider, who is the appellant in the present case. Extended period of limitation - Held that - Non-registration of the appellant, in the given circumstances, definitely amounts to suppression of relevant fact, which came to the notice of the Department lately only on the basis of some intelligence gathered by the Preventive Officers of Central Excise - extended period rightly invoked. Appeal dismissed - decided against appellant.

Issues Involved:
1. Jurisdiction of Commissioner, Raipur
2. Classification of services as erection, commissioning, and installation versus manufacturing
3. Payment of service tax by the principal (L&T)
4. Invocation of the extended period for issuing the show cause notice

Issue-wise Detailed Analysis:

1. Jurisdiction of Commissioner, Raipur:
The appellant challenged the jurisdiction of the Commissioner, Raipur, arguing that the work was executed outside Raipur's geographical limits. The Tribunal noted that the appellant's head office was in Raipur and that the appellant was not registered under the Service Tax Rules, 1994, either centrally or regionally. It was concluded that the Commissioner, Raipur, had competent jurisdiction as the appellant operated within the Raipur Commissionerate's domain. The Tribunal found no merit in the appellant's jurisdictional challenge, emphasizing that the appellant's failure to register under service tax rules supported the jurisdiction of Raipur Commissionerate.

2. Classification of Services:
The appellant contended that their activities were manufacturing rather than erection, commissioning, and installation services. The Tribunal examined Section 65(39A) of the Finance Act, 1994, and determined that the appellant's activities fell under the definition of erection, commissioning, and installation services. The Tribunal noted that the appellant's work, including fabricating stools with materials provided by L&T, did not constitute manufacturing as defined under Section 2(f) of the Central Excise Act. The Tribunal concluded that the appellant's activities were taxable services under sub-clause (zzd) of Section 65(105) of the Finance Act, 1994.

3. Payment of Service Tax by the Principal (L&T):
The appellant argued that L&T had already discharged the service tax liability on the overall project, absolving the appellant of further liability. The Tribunal rejected this argument, stating that the tax liabilities of L&T and the appellant were separate and pertained to different transactions and services. The Tribunal emphasized that service tax is to be deposited by the service provider, not the recipient. The Tribunal found no sufficient explanation or evidence from the appellant to support their claim that L&T's payment covered their liability.

4. Invocation of the Extended Period:
The appellant argued that the show cause notice was barred by time, asserting that the Department had no justified reason to invoke the extended period. The Tribunal observed that the appellant's proprietor was running two companies providing similar services to L&T, with one company registered under service tax and the other not. The Tribunal concluded that the appellant's non-registration amounted to suppression of relevant facts, justifying the invocation of the extended period for issuing the show cause notice. The Tribunal noted the appellant's uncooperative and obstructive attitude, which further supported the Department's action.

Conclusion:
The Tribunal upheld the order under challenge, confirming the demand of service tax and associated penalties. The appeals were rejected, and the Tribunal found no infirmity in the Commissioner's order. The Tribunal emphasized that the appellant's arguments were contradictory and that the appellant's conduct indicated an intent to evade tax. The Tribunal's decision was pronounced in open court on 28.06.2018.

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