2009 (10) TMI 97 - AT - Service Tax

The appellant is engaged in providing service in the category of commercial and industrial construction service. Appellant is only a sub-contractor. - the issue is covered by the decisions of the Tribunal in the case of Oikos and Koch-Glitsch India Ltd. v. CCE & Cus., Vadodara reported in 2009 - TMI - 32668 - CESTAT, AHMEDABAD wherein it has been held that a subcontractor is not liable to pay service tax if he is able to show that the contractor had actually paid the tax. This is on the ground that the same service there cannot be tax twice. further, according to Circular No. 96/7/2007-S.T., dated 23-8-2007,where the services have been provided by the sub-contractors such sub contractors are not liable to pay service tax and service tax liability is on the main contractor. - Circular and Tribunal s decision are squarely applicable to the facts of this case and accordingly appeal is allowed

Summary

Issues:
1. Liability of sub-contractor to pay service tax.
2. Applicability of circulars and tribunal decisions on service tax liability.

Issue 1: Liability of sub-contractor to pay service tax

The appellant, engaged in commercial and industrial construction services as a sub-contractor, was demanded an amount towards service tax for a specific period. Penalties were also imposed under various sections of the Finance Act, 1994. The appellant argued that based on previous tribunal decisions and circulars, a subcontractor is not liable to pay service tax if the contractor has already paid it. The appellant contended that taxing the sub-contractor again would amount to double taxation on the same service. The tribunal found merit in the appellant's argument, considering that the main contractor had paid the service tax and applying the relevant circular and tribunal decisions. Consequently, the tribunal allowed the appeal, providing relief to the appellant.

Issue 2: Applicability of circulars and tribunal decisions on service tax liability

The appellant's case hinged on the interpretation of circulars and tribunal decisions regarding service tax liability for sub-contractors. The appellant referred to a Master Circular issued by the Board and previous tribunal decisions to support their argument that a sub-contractor should not be liable to pay service tax if the main contractor has already paid it. The tribunal analyzed the circular and tribunal decisions cited by the appellant, noting that charging service tax on the sub-contractor again would result in double taxation on the same service. The tribunal concluded that the circular and tribunal decisions were directly relevant to the case at hand, leading to the allowance of the appeal and granting consequential relief to the appellant.

This summary provides a detailed analysis of the judgment, focusing on the liability of the sub-contractor to pay service tax and the impact of circulars and tribunal decisions on service tax liability.