2024 (3) TMI 12 - AT - Service Tax

Liability on sub -contractor to pay service tax - security service - service of manpower assistance given to M/s. Reliance Group Security Services (RGSS), who was the actual security provider - directions of the Tribunal not followed - violation of principles of natural justice - HELD THAT - The Tribunal while remanding the matter to the Adjudicating Authority made the certain observations. From the above remand order it can be seen that this Tribunal categorically observed that in de-novo adjudication, matter on the issue of limitation and also on the liability of service tax on sub contractor to be decided considering the judgments cited therein. On perusal of the order, it is found that the Adjudicating Authority has not touched upon any of the judgments cited by the appellant and recorded by the Tribunal in the order dated 22.09.2010, therefore, the adjudicating authority gravely erred in not following the directions of the Tribunal and thus seriously violated the principle of natural justice. Entire matter needs to re-considered following the directions given by this Tribunal in the order dated 22.09.2010 - impugned order set aside - appeal allowed by way of remand.

Summary

Issues involved:
The issue involved is whether the appellant, as a sub-contractor, was liable to pay service tax under security service category for providing manpower assistance to the main contractor, during the material period, as per the extant legal provisions and revenue instructions.

Details of the judgment:

Issue 1: Compliance with remand terms
The appellant contended that the impugned order confirmed a higher demand in violation of the remand terms set by the CESTAT in the first round of litigation. The appellant argued that various trade notices and case laws supported the position that no service tax could be demanded from a sub-contractor to the main contractor. Despite directions from the Tribunal, the adjudicating authority did not consider the judgments cited, leading to a violation of natural justice.

Issue 2: Liability of sub-contractor for service tax
The Tribunal observed that the appellant was registered with the service tax authorities as security service providers but provided security personnel as a sub-contractor to the main contractor. The appellant contended that they cannot be held liable for service tax as they were only a sub-contractor. The Tribunal remanded the matter for de-novo adjudication, emphasizing consideration of the judgments cited by the appellant and the issue of limitation. The Adjudicating Authority's failure to address the cited judgments constituted a serious violation of natural justice.

Conclusion:
The Tribunal set aside the impugned order and remanded the matter to the Adjudicating Authority for re-consideration in accordance with the directions given by the Tribunal in the previous order. The matter required a fresh adjudication to ensure compliance with the legal provisions and principles of natural justice.