2011 (12) TMI 165 - HC - Service Tax

Liability of Sub-Contractor to pay service tax when it stands paid by the main Contractor on the total amount inclusive of the service part, which was allotted to the assessee by the main Contractors - proof of deposit furnished - request for adjournment on medical ground rejected as the medical certificate has not been attached plea for waiver of deposit also rejected Held that - Revenue was not able to dispute the argument that amount of service tax is payable in respect of the services rendered either by the contractor or by the sub contractor and that the amount of service tax in respect of the same services cannot be charged twice. Further, petitioner has produced the challans in respect of deposit of service tax by the main contractors. In view of this, the direction of the Tribunal to deposit 50% of the amount of the demand raised, is unjustified and untenable. Consequently, the order is set aside and Tribunal is directed to decide the appeal without any predeposit. Further, while seeking adjournment on the medical ground, the medical certificates are not expected to be produced. Statement made by the assessee is expected to be accepted. Thus, there was no reason to decline the request for adjournment.

Issues:
1. Challenge to an order passed by the Customs Excise & Service Tax Appellate Tribunal regarding waiver of pre-deposit of duty, penalty, and interest.
2. Dispute over the payment of service tax by the main contractors on behalf of the petitioner, a sub-contractor.
3. Rejection of adjournment request by the Tribunal due to lack of attached medical certificate.
4. Justification of the Tribunal's direction to deposit 50% of the tax amount.

Detailed Analysis:
1. The petitioner challenged an order by the Tribunal requiring a 50% deposit of tax amount following a show cause notice for evading service tax. The petitioner, a sub-contractor for various main contractors, argued that the main contractors had already paid the service tax on the total amount, including the petitioner's part. The Adjudicating Authority imposed a substantial demand, penalty, and interest. The Tribunal rejected an adjournment request by the petitioner's counsel on medical grounds, leading to the deposit directive.

2. The petitioner presented Treasury receipts as evidence that the main contractors had paid the service tax. The Commissioner of Central Excise disputed this claim, stating that only two out of the four main contractors had confirmed paying the tax without specifying the amounts. The Commissioner argued that as a sub-contractor, the petitioner was liable to pay service tax for the services provided to the main contractors. The High Court noted the lack of specific denial by the Revenue regarding the main contractors' tax payments, supported by the proof of deposit provided by the petitioner.

3. The High Court criticized the Tribunal for unreasonably rejecting the adjournment request based on the absence of a medical certificate. The Court emphasized that the counsel's statement should have been accepted without requiring immediate production of the certificate. The Court found no valid reason for the Tribunal's refusal to grant an adjournment on medical grounds.

4. On the merits, the High Court determined that the petitioner had indeed submitted challans demonstrating the main contractors' payment of service tax. Given this evidence, the Court deemed the Tribunal's directive to deposit 50% of the tax demand unjustified and untenable. Consequently, the High Court set aside the Tribunal's order and instructed it to proceed with the appeal without any pre-deposit requirements for the tax, penalty, or interest amounts.

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