2018 (2) TMI 230 - AT - Service Tax

Consultancy service - sub-contract - whether the Appellant herein is required to discharge the service tax liability during the period April 2008 to September 2008 (actually November 2005 to August 2007) or otherwise? - Held that - if the main contractor has paid the service tax on the entire contract value which also include the value of the contract as given to sub-contractor, there is no necessity to pay the service tax by the sub-contractor - M/s Louis Berger was awarded a contract for civil work of Mumbai Urban Transport Project Road Network; it is undisputed that M/s Louis Berger has discharged the applicable service tax liability on the amount of contract awarded to them - demand set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Service tax liability of the appellant for the period April 2008 to September 2008 (originally November 2005 to August 2007).

Analysis:
The appeal was against the Order-in-Appeal passed by the Commissioner regarding the service tax liability of the appellant. The appellant, a sub-contractor of M/s Louis Berger Group INC, was involved in consulting work for a contract related to the Mumbai Urban Transport Project Road Network. The appellant did not discharge the service tax liability during the relevant period. The appellant produced a certificate from the CA of M/s Louis Berger stating that the main contractor had already paid the service tax on the total contract amount. Both lower authorities held that the appellant, as a sub-contractor, was required to discharge the service tax liability based on a Board Circular dated 23.8.2007.

The presiding member analyzed the situation and found that the lower authorities had misunderstood the law. It was established that M/s Louis Berger had indeed paid the service tax on the contract awarded to them, including the part assigned to the appellant. Referring to a previous decision by the Division Bench in the case of Mahalaxmi Infracontract Ltd., it was noted that if the main contractor had already paid the service tax on the entire contract value, including the sub-contractor's portion, then the sub-contractor was not obligated to pay the service tax separately. The presiding member applied this ratio to the current case and concluded that the impugned order was unsustainable.

Therefore, the presiding member set aside the impugned order and allowed the appeal, ruling in favor of the appellant.