2019 (3) TMI 1515 - HC - Service Tax

Liability of service tax - sob-contractor - payment of service tax by the main contractor - site formation service - mining service - service tax paid by main contractor - Whether the CESTAT is right in holding that the service tax paid by the main contractor on behalf of the party can be treated as payment made by the party when the service tax law in the instant case, provides for assessment and payment of the due tax by the service provider? Held that - Since the payment made by the main contractor had not been disputed by the revenue, it was treated as payment made by the assessee. Further, in view of Section 97 of the Finance Act, 2012, it was recorded that the assessee was not liable to pay service tax on the activity of maintenance and repair roads and demand on this account was set aside. As a result, the matter was remanded back to the adjudicating authority for verification purposes whether the assessee paid service tax for the remaining part of the demand. Learned counsel for the appellant revenue has not been able to point out any error or illegality in the findings recorded by the Tribunal, warranting interference by this Court - Appeal dismissed - decided against Revenue.

Issues:
Delay in refiling the appeal condoned; Interpretation of service tax law regarding payment made by main contractor on behalf of party; Assessment of service tax liability on site formation and mining services; Applicability of Section 97 of the Finance Act, 2012; Verification of service tax payment for remaining demand; Legal implications of payment made by main contractor on behalf of party.

Delay in Refiling the Appeal:
The High Court condoned the delay in refiling the appeal. The appellant-revenue filed the appeal under Section 35G of the Central Excise Act, 1944, seeking to set aside the final order passed by the Customs, Excise & Service Tax Appellate Tribunal, Chandigarh Bench. The appeal raised substantial questions of law concerning the interpretation of the service tax law.

Interpretation of Service Tax Law - Payment by Main Contractor:
The Tribunal found that the respondent was engaged in site formation and mining services and was liable to pay service tax. However, it noted that the main contractor had paid the service tax on behalf of the respondent. The Tribunal held that the payment made by the main contractor should be considered as payment made by the respondent. This interpretation was supported by referencing previous cases involving similar scenarios.

Assessment of Service Tax Liability:
The respondent was providing taxable services but had not paid service tax for the period 2007-08 to 2011-12. The Adjudicating Authority confirmed the demand for service tax, interest, and penalties. The Tribunal upheld the liability for site formation and mining services but set aside the demand for maintenance and repair of roads based on Section 97 of the Finance Act, 2012.

Applicability of Section 97 of the Finance Act, 2012:
The Tribunal ruled that the respondent was not liable to pay service tax on maintenance and repair of roads due to the provisions of Section 97 of the Finance Act, 2012. This decision led to the setting aside of the demand related to this activity.

Verification of Service Tax Payment:
The Tribunal remanded the matter to the adjudicating authority to verify if the respondent had paid service tax for the remaining part of the demand. If the payment was confirmed, no further demand would be sustainable against the respondent.

Legal Implications of Payment by Main Contractor:
The High Court dismissed the appeal by the appellant-revenue as it found no error or illegality in the Tribunal's findings. The Court stated that no substantial question of law arose from the case, and therefore, there was no basis for interference. The decision was supported by the lack of evidence of any error or illegality in the Tribunal's judgment.

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