2024 (9) TMI 1026 - AT - Service Tax

Liability of service tax on sub-contractor to main contractor - appellants are providing Site Formation services on Works Contract basis as sub-contractor to various clients - service tax on Site Formation services - service tax on MMRS provided for maintaining roads - service tax on Excavator rent - interest - penalty. Liability of service tax on sub-contractor to main contractor - appellants are providing Site Formation services on Works Contract basis as sub-contractor to various clients - HELD THAT - It is found that the Larger Bench in the case of COMMISSIONER OF SERVICE TAX VERSUS MELANGE DEVELOPERS PVT. LTD. 2019 (6) TMI 518 - CESTAT NEW DELHI-LB have set aside the confirmed demand amount on account of time bar after holding that on merits the Appeal fails. Following the ratio, the confirmed demand in respect of the services provided by the Appellant as sub-contractor is set aside. Service tax on Site Formation services - HELD THAT - In respect of Site Formation services provided by the Appellant and completed before the service was notified, it is held that no Service Tax is payable and hence, we allow the Appeal by setting aside the demand of Rs.48,960/-. Service tax on MMRS provided for maintaining roads - HELD THAT - In respect of MMRS provided by them for maintaining roads, it is found that retrospective effect has been given to give the benefit of exemption for the service providers who are taking up the management and maintenance of roads. Accordingly, the confirmed demand of Rs.14,53,536/- is set aside. Service tax on Excavator rent - HELD THAT - The Appellant is not contesting and accordingly, these amounts are payable along with interest. Interest - HELD THAT - In respect of interest of Rs.8,42,830/-, the Appellant is not contesting and is required to pay interest immediately. Penalty - HELD THAT - Since almost the entire demand amount stands set aside on various counts, there are no justification for imposing penalty on the Appellant company. Accordingly, all the penalties imposed are set aside - In respect of penalty imposed on the second Appellant, it is found that he is only acting as an employee of the company. As major portion of the demand has also been set aside. Hence, there are no justification in imposing any penalty on the employee. Appeal allowed in part.

Summary

Issues:
1. Service Tax liability of sub-contractor to main contractor.
2. Service Tax on Site Formation services completed before notification.
3. Management, Maintenance, and Repair Services (MMRS) tax liability.
4. Excavator rent, short payment of Service Tax, and interest payment disputes.
5. Imposition of penalties on the company and employee.

Analysis:

1. Service Tax liability of sub-contractor to main contractor:
The Appellants provided services as sub-contractors to main contractors, with the main contractors paying the Service Tax. The Adjudicating Authority confirmed demands for certain services. The Appellants argued that the demand for the extended period should be set aside based on case law. The Tribunal held that while the Appellants were liable to pay Service Tax independently, the demand for the extended period was set aside due to conflicting views in different benches. The confirmed demands for services provided as sub-contractors were set aside.

2. Service Tax on Site Formation services completed before notification:
The Appellants contended that Site Formation services were provided before the service was taxable. The Tribunal agreed that no Service Tax was payable for these services completed before the notification date, thus setting aside the demand related to these services.

3. Management, Maintenance, and Repair Services (MMRS) tax liability:
Regarding MMRS provided for maintaining roads, the Appellants claimed exemption based on statutory provisions. The Tribunal found that the exemption applied retrospectively, leading to the setting aside of the confirmed demand for MMRS.

4. Excavator rent, short payment of Service Tax, and interest payment disputes:
The Appellants did not contest the demands related to Excavator rent, short payment of Service Tax, and interest payment. The Tribunal held that these amounts were payable along with interest, as per the findings.

5. Imposition of penalties on the company and employee:
Given the setting aside of substantial demand amounts, the Tribunal found no justification for imposing penalties on the company or the employee. Therefore, all penalties imposed were set aside for both the company and the employee.

In conclusion, the Appeals were partly allowed, and the demands were disposed of accordingly, with penalties being set aside due to the substantial demand amounts being set aside on various grounds.