2024 (4) TMI 225 - AT - Service Tax

Classification of services - manpower supply services - reverse charge mechanism - N/N. 30/2012-ST dated 26.06.2012 - It is a case of the appellant that they had been paying the service tax in respect of all the services received to the provider of service tax, who has inter-deposited the service tax - HELD THAT - It is evident that the fact of payment of service tax under forward charge by the service provider is not in dispute. On perusal of the invoices it is evident that the service provider is a registered service provider, registered with the department and has issued the invoices to the appellant indicating the amount of service tax, educations cess and higher education-cess. Appellant, while making the payment have made the entire tax amount indicated in the invoices undisputedly. Further on the invoices the services provided are indicated as cleaning services, Assembling services etc. These services are not the services specified in the notification No 30/2012-ST and thus are not the services on which the appellant was required to discharge the tax liability under partial reverse charge mechanism. The service provider who is also registered with the Department was required to discharge the service tax liability under these category. Invoice show the complete transactions, service tax liability has been correctly discharged in the manner as prescribed under law. It is settled law that classification of service from one category to another category could not have been altered at the end of recipient of service to demand service tax under some other category of taxable service. There are no merits in the demand made by the impugned order and the same is set aside - As the demand has been set aside so is the penalty imposed - appeal allowed.

Summary

Issues Involved:
1. Classification of services received by the appellant.
2. Applicability of reverse charge mechanism (RCM).
3. Allegation of double taxation.
4. Timeliness of the demand.
5. Imposition of interest and penalties.

Summary:

1. Classification of Services Received by the Appellant:
The appellant engaged three agencies for housekeeping services, which included cleaning and dusting office areas, cleaning toilets, and providing consumables. The service providers were responsible for deploying personnel and managing administrative tasks. The appellant argued that these services were not manpower supply services but housekeeping services, for which the service providers had already paid service tax.

2. Applicability of Reverse Charge Mechanism (RCM):
During an audit, it was observed that the services received by the appellant should be classified under manpower supply services, requiring the appellant to pay 75% of the service tax u/s 73(1) of the Finance Act, 1994, under RCM as per Notification No. 30/2012-ST. The appellant contended that demanding service tax under RCM when the service providers had already paid it under forward charge amounted to double taxation.

3. Allegation of Double Taxation:
The appellant argued that the demand for service tax under RCM would result in double taxation since the service providers had already paid the tax under forward charge. The tribunal noted that the payment of service tax by the service providers was evidenced by invoices, and the services were indicated as cleaning services, which are not specified in Notification No. 30/2012-ST for RCM. The tribunal cited several case laws supporting the principle that service tax cannot be charged twice on the same transaction.

4. Timeliness of the Demand:
The appellant contended that the demand was time-barred and that the extended period for issuing the demand was not invokable. The tribunal did not explicitly address this issue in the judgment.

5. Imposition of Interest and Penalties:
The tribunal found no merit in the demand for service tax and set aside the demand, along with the penalties imposed u/s 77(2) and 78 of the Finance Act, 1994. The tribunal emphasized that once the service tax has been paid, it cannot be demanded again under a different category.

Conclusion:
The appeal was allowed, and the demand for service tax, interest, and penalties was set aside. The tribunal reiterated that service tax cannot be charged twice on the same transaction, and the classification of services cannot be altered at the recipient's end. The decision was pronounced in open court.