2019 (2) TMI 483 - AT - Service Tax

Liability of service tax - sub-contract - erection, commissioning or installation service - appellant claims that the principal has already paid the said amount, and no further liability remains on his part - time limitation - Held that - The demand raised on the appellant under this category of being taxable as a sub-contractor for the period April 2004 to September 2007 seems to be incorrect as identical issue cropped up before this Bench in the case of Power Mech Projects Ltd 2016 (9) TMI 844 - CESTAT HYDERABAD , where it was held that the demand of service tax for ECIS services is not sustainable as the main contractor has discharged the service tax liability - demand set aside. Manpower recruitment or supply agency service - SSI Exemption - Held that - This demand is sustainable on the appellant. It is undisputed that appellant had during the period in question had supplied temporary manpower to B&R for executing various works on M/s B&R. This would fall under the category of manpower recruitment or supply agency services - The point which has been urged by the learned counsel that appellant would be eligible for small scale service providers exemption will not carry their case any further as in order to claim exemption, appellant s turn over has to be within a specified limit as per the Notification. In the case in hand we find that appellant s taxability on the services rendered as a sub-contractor is not in dispute but the liability has been discharged by the main contractor - the amount is liable to be included in the gross turnover - demand with interest upheld - penalty set aside. Appeal allowed in part.

Summary

Issues:
1. Liability of service tax as a sub-contractor for erection, commissioning, or installation services and manpower recruitment or supply agency services.
2. Applicability of small-scale service provider exemption.
3. Demand of service tax for fabrication and erection work.
4. Limitation period for raising the demand.
5. Imposition of penalties.

Analysis:
1. The appeals were against the order-in-original directing the appellant to discharge service tax liability as a sub-contractor for the period April 2004 to March 2008. The appellant contested the notice, claiming exemption as a small-scale service provider and arguing that the main contractor had already paid the tax. The Tribunal found that the main contractor had indeed discharged the service tax liability, leading to the demands being set aside for the period April 2004 to March 2007. The demand for manpower recruitment services was upheld, but penalties were set aside.

2. The demand for service tax under the category of manpower recruitment or supply agency services was found to be sustainable. The appellant had supplied temporary manpower to the main contractor, falling under this category. The argument for small-scale service provider exemption was rejected as the turnover of sub-contracted value needed to be included for such exemption. The demand was upheld, but the penalty was set aside.

3. The revenue appealed against the dropping of demand for fabrication and erection work, contending that it did not fall under the category of erection, commissioning, or installation services. The Tribunal upheld this appeal, stating that the demand was not sustainable for this specific work.

4. Regarding the limitation period for raising the demand, it was argued that all necessary documents had been produced by the appellant, and thus, the demand was hit by limitation. However, the Tribunal did not find merit in this argument and upheld the demands raised by the adjudicating authority.

5. The imposition of penalties was a point of contention. The Tribunal set aside penalties imposed for certain amounts, citing misinterpretation of provisions, and invoked Section 80 of the Finance Act 1994 to set aside penalties in those instances.

In conclusion, the appellant's appeal was partly allowed and partly rejected, with the demand for certain services being set aside based on the main contractor's discharge of tax liability. The revenue's appeal regarding specific demands was upheld, and penalties were set aside in certain instances.