2019 (12) TMI 1169 - AT - Service Tax

Sub-contract - liability of sub-contractor to pay service tax - main contractor sub contracted part of the work to the appellant, who rendered the services and did not pay any service tax by writing on the invoices that service tax is exempted as per N/N. 25/2012 ST dated 20.06.2012 - HELD THAT - The services provided by the assessee were part of the main contract awarded by the State Government to the principles contractor. Further Commissioner (Appeals) has relied upon the instructions issued by the board itself laying down that in such a scenario no tax liability would fall upon the sub-contractor. There are no infirmity in the order of Commissioner (Appeals) - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Stay petition filed by the Revenue regarding the non-executable order of the Commissioner (Appeals).
2. Whether the appellant was liable to pay service tax for services provided to the main contractor or exempted due to sub-contracting for a government project.

Analysis:
1. The Tribunal rejected the stay petition filed by the Revenue concerning the non-executable order of the Commissioner (Appeals). The Tribunal found no reasons to stay the operation of the order, leading to the rejection of the stay petition.

2. The main issue revolved around whether the appellant was liable to pay service tax for services provided to the main contractor or exempted due to sub-contracting for a government project. The Government of Andhra Pradesh awarded a contract to the main contractor for canal work, who further sub-contracted part of the work to the appellant. The appellant did not charge service tax, citing exemption under Notification No.25/2012-ST dated 20.06.2012.

3. The proceedings were initiated against the appellant by way of a show cause notice proposing confirmation of service tax, interest, and penalty. The Original Adjudicating Authority passed an order, which was appealed by the appellant. The Commissioner (Appeals) allowed relief to the appellant, emphasizing that the services were ultimately for the State Government, and the exemption under the notification could not be denied based on sub-contracting.

4. The Revenue appealed against the order of the Commissioner (Appeals), contending that the appellant provided services to the main contractor and not directly to the State Government. However, the Tribunal noted that the services provided were part of the main contract awarded by the State Government, and the instructions issued by the board supported the exemption for the sub-contractor. Consequently, the Tribunal found no infirmity in the order of the Commissioner (Appeals) and rejected the Revenue's appeal.

5. Both the stay petition and the appeal were disposed of in the above manner, with the Tribunal upholding the decision of the Commissioner (Appeals) in favor of the appellant.