2018 (11) TMI 360 - AT - Service Tax

Liability of appellant (service-receiver) to pay service tax - Works Contract - the appellant reimbursed the total amount of service tax to the service provider who paid the entire service tax - Held that - Although service provider was required to be 50% of the service tax but paid 100%, therefore, in the light of the decision of this Tribunal in the case of Katrina R. Turcottee 2012 (12) TMI 579 - CESTAT AHMEDABAD , wherein it has been held that if service tax has been paid on behalf of the assessee by third party, the same shall be treated that assesssee himself has paid service tax, therefore, as service provider has paid service tax on behalf of the appellant, the same to be deemed as the appellant paid service tax. The appellant has discharged their service tax liability through service provider. Therefore, no liability of service tax arises against the appellant - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Liability of the appellant to pay service tax under a works contract where the service provider has already paid the entire service tax.
2. Interpretation of Notification No. 30/2012 dated 20.06.2012 regarding the apportionment of service tax in works contracts.

Analysis:
1. The appellant was contesting an order confirming the demand of service tax against them, arguing that they are not liable to pay service tax as the service provider had already paid the entire amount. The appellant had reimbursed the total service tax amount to the service provider, who had paid the entire tax on the services received under a works contract.

2. The revenue's case was based on the contention that the appellant is required to pay 50% of the service tax under Notification No. 30/2012, irrespective of whether the service provider has paid the full amount. The proceedings were initiated against the appellant, resulting in the demand for service tax and imposition of penalties. The appellant challenged this order before the Tribunal.

3. After hearing both parties, the Tribunal noted that the entire service tax on the services received by the appellant had been paid by the service provider, even though they were only required to pay 50% as per the notification. Citing a previous decision, the Tribunal held that when service tax is paid by a third party on behalf of the assessee, it is deemed that the assessee has paid the tax. Therefore, the Tribunal concluded that the appellant had fulfilled their service tax liability through the service provider's payment, absolving them of any further liability.

4. Consequently, the Tribunal set aside the impugned order, ruling in favor of the appellant and allowing the appeal. The judgment emphasized that since the service provider had paid the entire service tax amount, the appellant was not liable to pay any additional service tax.