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2023 (10) TMI 1091 - AT - Service TaxLevy of service tax - providing the service in the capacity of subcontractor on behalf of the main contractor - suppression of facts or not - SCN dated 18.10.2009, was issued for the period September 2005 to June 2009 - invocation of extended period of limitation - HELD THAT - The fact of the case is not under dispute that the appellant have provided the service of erection, commissioning and installation and fabrication in the capacity of sub-contractor for the main contractors as named above. The issue that in a case where the service was provided by the sub-contractor whether the sub-contractor is liable to pay Service Tax was under dispute in various cases and finally the same was decided by the Larger Bench in the case of COMMISSIONER OF SERVICE TAX VERSUS MELANGE DEVELOPERS PVT. LTD. 2019 (6) TMI 518 - CESTAT NEW DELHI . Moreover, on the issue of taxability on the sub-contractor, there were contrary board circulars, in the first circular the board has clarified where the service is provided by the sub-contractor, the main contractor on whose behalf service is provided, is liable to pay the Service Tax and sub-contractor is not liable to pay Service Tax - However, later on taking U-turn, the board has clarified that the sub-contractor being independent service provider in any case is required to pay the Service Tax. Therefore, due to lack of clarity on the issue during relevant time and the issue being finally decided by the Larger Bench, no mala fide intention to evade payment of Service Tax can be attributed to the appellant. In the present case, since the service provision is during period September 2004 to April 2008, the SCN issued on 18.10.2009, the entire period is beyond normal period and hence the demand for the said period is not sustainable on the ground of time bar. This issue particularly on the ground of time bar has been decided in PRAMUKH EARTH MOVERS VERSUS C.C.E. S.T. -VAPI 2023 (8) TMI 851 - CESTAT AHMEDABAD where it was held that the entire demand being issued for extended period i.e. beyond one year from the date of show cause notice shall not sustain on limitation alone. The impugned order is set aside. The appeal is allowed.
Issues Involved:
1. Whether the demand of Service Tax on the appellant, a sub-contractor, is unsustainable on the ground of time bar. 2. Whether the extended period of limitation can be invoked in this case. Summary: Issue 1: Demand of Service Tax on Sub-Contractor and Time Bar The appellant, acting as a sub-contractor for main contractors including Petron Engineering Construction Ltd., Punj Llyod Ltd, BHEL, Engineering India Ltd, and L&T, faced a demand for Service Tax for the period September 2005 to June 2009. The Show Cause Notice (SCN) was issued on 18.10.2009, covering services provided from 10.09.2004 to 30.04.2008. The appellant argued that the demand is time-barred, citing conflicting board circulars and the Larger Bench decision in the case of M/s. Melagne Developers Pvt Ltd -2019 (6) TMI 518 (CESTAT New Delhi). The Tribunal found that due to the lack of clarity and conflicting circulars during the relevant period, no mala fide intention to evade tax could be attributed to the appellant. Consequently, the demand for the period beyond the normal limitation is unsustainable. Issue 2: Extended Period of Limitation The Tribunal considered various judgments, including those in the cases of M/s. Pramukh Earth Movers, Synergy Engineers Group Pvt Ltd, Vinoth Shipping Services, Vishal Engineering Company, and others. It was consistently held that the extended period of limitation could not be invoked due to the bona fide belief and conflicting judgments regarding the taxability of sub-contractors. The Tribunal cited the Larger Bench decision in M/s Melange Developers Pvt. Ltd, which clarified that the sub-contractor is liable to pay Service Tax, but the extended period cannot be invoked without clear evidence of suppression, misstatement, fraud, or collusion with intent to evade tax. The Tribunal concluded that the demand for Service Tax for the extended period is not sustainable and set aside the impugned order, allowing the appeal with consequential relief in accordance with the law. Conclusion: The Tribunal set aside the impugned order and allowed the appeal, ruling that the demand for Service Tax on the appellant, a sub-contractor, is unsustainable on the ground of time bar, and the extended period of limitation cannot be invoked. The decision was pronounced in open court on 20.10.2023.
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