2023 (12) TMI 1005 - AT - Service Tax

Classification of services - Erection Installation of Scaffolding - manpower supply/recruitment agency service or Erection Installation and Commissioning Service? - abatement claim - taxability of service provided to Reliance Industries Ltd. (SEZ) Jamnagar - levy of service tax on differential value arising between the figure shown as credit of service charge in the books of accounts and ST-3 return on account of credit shown twice once against receipt of service charge and second the value taken from 26-AS - Time Limitation. HELD THAT - From the contract order of Leo Coats (I) Private Limited, it is clear that the appellant has provided the service of Scaffolding, Erection and Dismantling. From the nature of the service, there is no doubt that the service does not fall under the Man-power recruitment or supply agency service. Moreover, the job is not on the basis of man hour or number of man power but it is on the quantum of work and the rate is also as per cubic meter of Scaffolding, Erection Dismantling, therefore, the service is undisputedly does not fall under Manpower Agency Service but falls under Erection Installation Commissioning Service. The Appellant considering the service as Manpower Recruitment Supply Agency Service, availed the abatement of 75% and paid the service tax only on 25%. However it is not in dispute that on 75% of the Service provided by the appellant, the service recipient has discharged the service tax, which is clear from the work contract as well as the confirmation given by M/s Leo Coats (I) Private Limited. The appellant s service is classifiable under Erection Installation Commissioning Service but the fact remains that on the entire service the service tax was paid i.e. 25% by the appellant and on 75% by the service recipient. Since the entire service has suffered the service tax only for technical reason the department has no right to demand the service tax twice, therefore, on this ground, the service tax demand on the basis of is not sustainable. This issue has been considered time and again and in the following judgments, it has been held that service tax cannot be demanded twice even though the person who is liable to pay the service tax has not discharged the service tax but some other person has discharged the service tax on the same service. It is settled that once the service has suffered the service tax irrespective of anyone paid the service tax, the service tax cannot be demanded twice. Therefore, we hold that in respect of Erection Installation Commissioning Service, the service tax demand is not sustainable. Hence the same is set aside. Service provided to Reliance Industries Limited (SEZ) Jamnagar Unit - HELD THAT - It is a settled law and even as per the SEZ Act, that any service provided to SEZ is exempted from payment of service tax. In this regard in the case of CCE Patna vs Advantage Media Consultant, 2008 (3) TMI 59 - CESTAT KOLKATA , it was held When the amount is collected for the provision of services, the total compensation received should be treated as inclusive of service tax due to be paid by the ultimate customer of the services unless service tax is also paid by the customer separately. When no tax is collected separately, the gross amount has to be adopted to quantify the tax liability treating it as value of taxable service plus service tax payable - the service tax demand on the service provided to SEZ is not sustainable. Time Limitation - HELD THAT - It is found that in the submission of the appellant that the show cause notice has not expressly alleged any ingredient such as suppression of fact, misdeclaration, fraud, collusion etc with intent to evade payment of duty, the extended period cannot be invoked. Moreover, the appellant is a registered unit, was paying service tax on 25% of the service charges and were filing regular ST-3 Returns, therefore, it is not found any suppression of fact on the part of the appellant. Accordingly, the remaining payment being covered under extended period, will not sustain. Hence, the same is set aside on the ground of time bar. The service tax demand is not sustainable. Hence, the same is set aside. Appeals are allowed.

Issues Involved:
1. Classification of the service provided by the appellant.
2. Eligibility for exemption from service tax under Manpower Recruitment & Supply Agency Service.
3. Double taxation on 75% of service charge.
4. Taxability of services provided to Reliance Industries Ltd. (SEZ) Jamnagar.
5. Service tax demand on differential value between the books of accounts and ST-3 return.

Summary:

1. Classification of Service:
The primary issue is whether the service provided by the appellant, i.e., Erection Installation of Scaffolding, falls under Manpower Recruitment & Supply Agency Service or Erection Installation and Commissioning Service. The Tribunal concluded that the service is not based on man-hours or the number of manpower but on the quantum of work, and the rate is per cubic meter of Scaffolding, Erection & Dismantling. Therefore, the service is classified under Erection Installation & Commissioning Service.

2. Eligibility for Exemption:
The appellant availed of a 75% abatement considering the service as Manpower Recruitment & Supply Agency Service and paid service tax on 25%. However, it was undisputed that the service recipient discharged the service tax on the remaining 75%. The Tribunal held that since the entire service tax was paid (25% by the appellant and 75% by the recipient), the department cannot demand service tax twice for the same service.

3. Double Taxation:
The Tribunal cited several judgments, including Dhariwal Industries Ltd. and Transpek Silox Industries Pvt. Ltd., to support that service tax cannot be demanded twice on the same service. The Tribunal concluded that demanding service tax from the appellant when the recipient has already paid it would amount to double taxation, which is impermissible.

4. Services to Reliance Industries Ltd. (SEZ) Jamnagar:
The service provided to Reliance Industries Ltd. (SEZ) Jamnagar was held to be non-taxable as per the SEZ Act, which exempts services provided to SEZ units from service tax. The Tribunal referenced the case of CCE Patna vs Advantage Media Consultant to support this conclusion.

5. Differential Value in Books of Accounts and ST-3 Return:
The appellant argued that the difference was due to a clerical error and not intentional suppression or fraud. The Tribunal found no suppression of facts since the appellant was a registered unit, regularly filing ST-3 returns and paying service tax on 25% of the service charges. Therefore, the demand for the remaining amount was set aside on the grounds of time bar.

Conclusion:
The Tribunal set aside the service tax demand on all counts, including classification under Erection Installation & Commissioning Service, non-taxability of services to SEZ, and the time-barred nature of the remaining demand. Appeals were allowed.

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