2023 (12) TMI 1110 - AT - Service Tax

Waiver of demand for service provided by the appellant as a sub-contractor for the period prior to the Board Circular No. 23/3/97-ST dated 13.10.1997 - Circular prescribes that when the Service Tax on the entire value was discharged by the main contractor the sub-contractor is not required to pay service tax - applicability of clarification via Circular No. 96/7/2007-ST dated 23.08.2007 - HELD THAT - It is found that this case can be decided even without going into merit of the case that whether the service provided by the sub-contractor is liable to Service Tax or otherwise. It is found that including the case laws cited by the respondent this Tribunal taking consistent view that during the period prior to 2007 when the Circular No. 23/3/97-ST dated 13.10.1997 dated 23.08.2007, was in force which clarified that sub-contractor is not required to pay Service Tax when the main contractor has discharged the Service Tax. In this case this fact is not under dispute - on this similar fact this Tribunal has taken view that there is no mala fide on the part of the assessee. The demand for extended period was set aside - appeal of revenue dismissed.

Summary

Issues involved:
The issue involves whether a demand set aside by the Adjudicating Authority in relation to service provided by the appellant as a sub-contractor for the period before a Board Circular, which stated that the sub-contractor need not pay service tax if the main contractor has already paid the tax, is legally correct. The appeal was filed by the revenue challenging the order-in-original that set aside the demand, citing a Larger Bench judgment stating that the sub-contractor is independently liable to pay service tax.

Summary of Judgment:

Issue 1:
The Tribunal considered the conflicting positions arising from the Board Circular in force prior to 2007 and the subsequent clarification in 2007 regarding the liability of sub-contractors to pay service tax independently. The respondent relied on various judgments, including those of the Tribunal, to support the view that demands on sub-contractors were set aside even after considering the Board Circular and the Larger Bench judgment.

Issue 2:
After careful consideration of submissions and records, the Tribunal found that the case could be decided without delving into the merit of whether the service provided by the sub-contractor is taxable. The Tribunal noted that consistent views were taken by previous judgments, holding that during the period covered by the 1997 Circular, sub-contractors were not required to pay service tax if the main contractor had discharged it. As the demand in the present case was for the extended period, and previous judgments had held such demands as time-barred, the Tribunal upheld the order of the Adjudicating Authority and dismissed the revenue's appeal.