2023 (11) TMI 155 - AT - Service Tax

Liability of appellant to pay service tax - services rendered by appellant and, their principals have discharged the duty on behalf of all the agents - Extended Period of Limitation - HELD THAT - It is clear that the applicable service tax stands paid in the instant case. The facts of the impugned case are different from those in the case of M/s Melange Developers 2019 (6) TMI 518 - CESTAT NEW DELHI-LB relied upon by the learned Authorized Representative. The issue before the Larger Bench in the case of M/s Melange Developers was that whether a sub-contractor is liable to pay service tax where the main contractor has paid service tax on the total value of the contract. In the instant case, however, it is clear that M/s SETD have discharged the service tax payable by the Agent. Payment of service tax into the Revenue Exchequer is not in dispute. What is in dispute is who has to discharge the service tax liability - service tax having been paid, though, by the principal on the services rendered by the appellant, it cannot be a case of non-payment of applicable service tax. Once service tax is paid, there is no loss to the revenue of the Government, the question as to who has paid the same, remains a procedural issue and thereto, an empty one. Extended period of limitation - HELD THAT - There are cogent reasons for the appellant to believe that they are not obliged to pay service tax again; therefore, the ambiguity in the minds of the appellant is a bona fide one. Therefore, extended period cannot be invoked. Appeal allowed both on merits and limitation.

Summary

Issues involved:
The issues involved in the judgment are whether the appellants are required to pay service tax for the services rendered by them even though their principals have discharged the duty on behalf of all the agents, and whether the extended period for invoking the demand is applicable.

Issue 1: Service Tax Liability

The appellants, engaged in collection of fees for TV channels, challenged an Order-in-Appeal upholding a demand raised via a show-cause notice. The dispute centered on the service tax liability, with the appellants claiming their principals had paid the tax on their behalf. The appellants provided a certificate from their principals confirming payment for a specific period. The Department contended that the appellants failed to prove the deposit of service tax by the service recipient. The Tribunal noted the show-cause notice acknowledged the disputed tax was paid by the principals, clarifying the liability. It distinguished this case from precedent cases, emphasizing that the payment of service tax was not in dispute, only the party responsible for the liability.

Issue 2: Invocation of Extended Period

The Department argued for the invocation of the extended period due to alleged suppression of facts by the appellants. However, the Tribunal found that the appellants had informed the Department of the service tax payment by their principals, creating a genuine ambiguity in the appellants' minds regarding their obligation to pay the tax again. Citing a Supreme Court case, the Tribunal concluded that the extended period was not warranted in this scenario. The Tribunal held that as the service tax had been paid, there was no loss to the government revenue, making the question of who paid it a procedural matter. Consequently, the appeal succeeded on both merits and limitation, and the extended period was not applicable.

Conclusion

The Appellate Tribunal CESTAT Chandigarh, in a judgment pronounced on 31/10/2023, allowed the appeal, ruling in favor of the appellants. The Tribunal found that the service tax liability was discharged by the principals, absolving the appellants of the obligation to pay again. Additionally, the Tribunal determined that the extended period for invoking the demand was not justified due to the appellants' genuine belief based on the information provided to the Department.