2014 (9) TMI 462 - AT - Service Tax

Business Transfer Agreement - appellant herein received the outstanding debts of Essar Projects Ltd by virtue of Business Transfer Agreement, this amount is being held by the Adjudicating Authority as an amount received for provision of taxable services and tax liability arise. - Held that - Essar Projects Ltd had undisputedly discharged the Service Tax liability which is confirmed against the appellant. - Departmental audit team has confirmed this fact - the audit officers have held that an amount of ₹ 9,96,14,733/-has been paid by Essar Projects Ltd which they need not have to pay. It can be seen from the impugned order that the Adjudicating Authority has confirmed the exact amount to the last rupee. Service Tax liability which has already been discharged, cannot be again recovered from the appellant, who has taken-over the business from a particular day. This would amount to double taxation on the same service which is not contemplated in law. - Decided in favor of assessee.

Summary

Issues:
1. Liability for Service Tax on business transfer agreement.
2. Discharge of Service Tax liability by the transferor.
3. Double taxation and liability of the transferee.

Analysis:
1. The case involved determining the liability for Service Tax on a business transfer agreement where the appellant took over a business from another company. The appellant held Service Tax registration under various categories since 2006. The issue arose when the appellant did not pay Service Tax on services provided after taking over the business. The lower authorities issued a show cause notice demanding the tax, interest, and penalties. The appellant contested the notice, arguing that the tax liability should be on the transferor and that the tax amount was already paid by the transferor.

2. The appellant's counsel argued that the transferor had discharged the Service Tax liability, as confirmed by an audit report. The audit report indicated that the transferor had paid the tax amount, which was not contested by the revenue department. The appellant contended that demanding the tax again from the transferee would amount to double taxation on the same service, which is not permissible under the law. The appellate tribunal found that the Service Tax liability, once discharged by the transferor, cannot be imposed again on the transferee who took over the business on a specific date.

3. The tribunal, after considering the facts and submissions, set aside the impugned order as unsustainable. It was held that the appeal filed by the assessee was allowed, emphasizing that the Service Tax liability already discharged by the transferor cannot be recovered again from the transferee. The decision highlighted the principle that double taxation on the same service is not contemplated in law. Therefore, the tribunal ruled in favor of the appellant, concluding that the demand for Service Tax from the transferee was unjustified, and the impugned order was set aside.