2018 (5) TMI 1127 - AT - Service Tax

Demand of service tax - security services - abatement of 75% - reverse charge mechanism - N/N. 30/2012-ST dated 20.6.2012 - Held that - once the entire service tax has been paid by the service provider and the appellant has paid the share of 75% of the service tax to the service provider, there remains no tax due to the Government - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Appeal against rejection of service tax payment on security services under Reverse Charge Mechanism.
- Applicability of double taxation and legal sustainability of demanding service tax from service receiver.

Analysis:
1. Issue 1 - Appeal against rejection of service tax payment on security services under Reverse Charge Mechanism:
The appeal was directed against the Commissioner (A)'s order rejecting the appellant's appeal regarding non-payment of service tax on security services under the Reverse Charge Mechanism. The appellant, a service provider in the category of "mining of minerals, oil and gas services," received security services from various providers but had not paid service tax on 75% of the gross value of services as per Notification No.30/2012-ST. The Asst. Commissioner confirmed the demand of service tax for the period from July 2012 to December 2014, along with interest and penalty. The appellant contended that they had paid 75% of the service tax amount to the service provider, who, in turn, paid the tax to the Government Account. The appellant argued that demanding service tax again from them would amount to double taxation, citing relevant case laws in support of their position.

2. Issue 2 - Applicability of double taxation and legal sustainability of demanding service tax from service receiver:
The appellant's counsel argued that once the service provider had paid the entire service tax and the appellant had paid their share under the Reverse Charge Mechanism, there was no further tax due to the Government. The counsel relied on specific decisions to support the contention that demanding service tax from the appellant, after the service provider had already paid the tax, would constitute double taxation and was impermissible under the law. After considering the submissions and the case laws cited, the Judicial Member concluded that the impugned order was unsustainable in law. The Judicial Member set aside the order, allowing the appeal of the appellant based on the principle that once the service tax had been fully paid by the service provider, demanding it again from the appellant would lead to double taxation, which was not legally permissible.

In conclusion, the judgment favored the appellant, setting aside the order rejecting the appeal and emphasizing the principle that demanding service tax from the service receiver after the service provider had already paid the tax amounted to double taxation, which was not permitted under the law.