2017 (9) TMI 879 - AT - Service Tax

Sub-contract - Architect Service - Consulting Engineers Service - CBEC Circular No.B 11/I/98-TRU dated 07.10.1998 - Held that - in this case, the appellant provided architect service and the main contractor provided Consulting Engineer Service. Thus, payment of Service Tax under different category by the main contractor will not absolve the appellant from its liability of payment of Service Tax, which was provided entirely different category of service - appeal dismissed - decided against appellant.

Summary

Issues:
Service Tax demand on Architect Service provided by the appellant to a client, liability of the appellant for Service Tax payment when the main contractor has paid tax under a different category.

Analysis:
The appeal was filed against the order confirming Service Tax demand on the appellant for providing Architect Service to a client. The appellant's argument that the client had already paid Service Tax on the Consultancy Fee was rejected by the Department, stating that the services provided by the appellant and the client fell under different taxable categories.

The Tribunal noted that the appellant provided Architect Service, while the client provided Consulting Engineer Service. Referring to a CBEC Circular, it was established that if a subcontractor provides a different category of service than the main contractor, Service Tax is required to be paid by the subcontractor. The Tribunal emphasized that the statutory requirement mandates the service provider to pay the Service Tax, and payment by another service provider does not absolve the liability of the actual service provider.

Citing judgments from the Hon'ble High Court of Kerala and the Tribunal, it was clarified that the remittance of Service Tax by the principal contractor does not extinguish the sub-contractor's Service Tax liability. The Tribunal highlighted that every taxable service provider must deposit tax at each stage of providing the service, emphasizing that the appellant cannot evade tax liability based on the main contractor's payment.

Consequently, the Tribunal found no merit in the appellant's appeal and dismissed it, upholding the Service Tax demand on the Architect Service provided by the appellant. The judgment was pronounced on 12/07/2017.