2018 (11) TMI 572 - AT - Service Tax

Erection Commissioning Installation Services - sub-contract - Extended period of limitation - only reason advanced in the impugned order for invocation of the extended period is that the appellant was not paying any service tax and did not file any returns - Held that - Such reasoning adopted by the ld. Authorities would not advance their case in as much as in each and every case of non payment of service tax and non filing of returns, the extended period would get invoked, thus making the provisions of Section 73 of the Finance Act as infructuous. The Hon ble Supreme Court, in the case of Continental Foundation Joint Venture vs. Commissioner of Central Excise, Chandigarh 2007 (8) TMI 11 - SUPREME COURT OF INDIA Supreme Court has held that where the matters stand referred to the Larger Bench, doubting the correctness of the earlier judgments, there was scope of entertaining a doubt about the views to be taken which rules out application of Section 11(A) of the Central Excise Act and extended period of limitation is not available to the Revenue. Appeal is allowed on the ground of time bar.

Summary

Issues:
Demand of service tax under Erection Commissioning Installation Services for 2005-06 to 2007-08 period; Time bar for the demand; Liability of sub-contractor when principal contractor has paid full tax; Invocation of extended period of limitation.

Analysis:

Demand of Service Tax:
- The appellant was held liable for service tax amounting to ?3,42,644 under Erection Commissioning Installation Services for the period 2005-06 to 2007-08.
- The demand was confirmed as the appellant, working as a sub-contractor under a main contractor, did not pay the service tax despite the principal contractor discharging the entire tax liability on the full contract value.
- Penalties were imposed under section 76 of the Finance Act along with interest.

Time Bar Issue:
- The appellant contested the demand on the grounds of time bar, stating that the show cause notice was issued on 19/4/2011 for a period dating back to 2005-06 to 5th July 2007.
- The appellant argued that all relevant facts were reflected in their balance sheet and audit, and that the Revenue picked figures from these records, indicating no mala fide on their part.
- The Tribunal held that the invocation of the extended period of limitation solely based on non-payment of service tax and non-filing of returns was not justified. The Revenue failed to produce positive evidence of mala fide intent on the part of the appellant.

Liability of Sub-Contractor:
- The issue of whether a sub-contractor is liable for tax when the principal contractor has paid the full duty was referred to a larger bench.
- The Tribunal noted that there were previous decisions stating that when the principal contractor pays the full tax, no additional liability falls on the sub-contractor.
- Citing a Supreme Court case, the Tribunal emphasized that in cases where doubts exist regarding the correctness of judgments, the extended period of limitation is not available to the Revenue.

Conclusion:
- The Tribunal set aside the demand, interest, and penalties imposed, and allowed the appeal solely on the ground of time bar.
- The decision was based on the lack of evidence of mala fide intent by the appellant, the existence of doubt in the field regarding the liability of sub-contractors, and the precedence of decisions indicating no further tax liability for sub-contractors when the principal contractor has paid in full.