2022 (12) TMI 1145 - AT - Service Tax

Levy of Service Tax - differential value in comparing Form 26AS/ITR statement and taxable value declared in the ST-3 returns for the year 2016-17 - time limitation - HELD THAT - The admitted facts involved in the present case are that the Appellant had undertaken Government construction work, in the capacity of a sub-contractor, for the main contractor M/s. Shantilal B. Patel Co. for all the three separate disputes involved in the present appeal. All remaining demand originally proposed, are already dropped by the Adjudicating authority himself. It is also an admitted fact, as also certified by the main contractor, that they neither paid any Service Tax in respect of all three service activities in dispute, nor any demand was raised against them in this regard as well. The Appellant has mainly contended that they were under bonafide belief that no Service Tax was payable on the work in question, being exclusively Governmental construction and when the main contractor too had not paid any Service Tax thereon without any adverse view being taken by Service Tax department. The demand is mainly contested as being time-barred as such - Also if the Appellant was liable to pay Service Tax, back to back, even the main contractor would have also been liable to pay the same. Whatever Service Tax, if paid by the Appellant, would have been back to back availed as Cenvat Credit by the main contractor anyway. Therefore without going into any other issues, including whether exemption for construction of affordable housing under MGY scheme is available irrespective of small portion of commercial construction involved as part of MGY scheme under the tender floated, we find that the issue on hand can otherwise be decided in the facts and circumstances of the present case, on account of demands being time-barred - no purposeful meaning will be served by remanding the matter back for re-examination of this, especially in light of the fact that the appeals are required to be allowed on account of demands being time-barred anyway. Appeal allowed.

Summary

Issues:
1. Liability of the Appellant to pay Service Tax on differential value in Form 26AS/ITR statement and taxable value declared in ST-3 returns for 2016-17.

Analysis:
The case involved the Appellant engaged in construction activities for Government projects. The primary issue was the liability of the Appellant to pay Service Tax based on the differential value in Form 26AS/ITR statement and taxable value declared in ST-3 returns for the year 2016-17.

The Appellant, acting as a sub-contractor to the main contractor, argued that they were exempt from Service Tax payment under Notification No.25/12-ST Sr. No.29(h) as the main contractor was not subjected to any Service Tax demand. Three separate disputes were discussed: construction of Affordable Housing under Mukhyamantri Gruh Yojna (MGY), Narmada Guest House construction, and Irrigation work for Bodki Irrigation Scheme. The Appellant contended that their belief in exemption for Governmental work was bonafide, especially since no demand was raised on the main contractor.

The Appellant's counsel cited a previous case to support the argument that if any duty was paid by the job worker, it would be availed as Cenvat Credit by the principal, leading to a revenue-neutral situation. Therefore, the demand was considered time-barred.

The Authorized Representative reiterated the findings of the lower authority, emphasizing that the exemption was not available due to the involvement of marginal commercial construction alongside affordable housing.

The Tribunal examined the submissions and admitted facts, noting that the main contractor did not pay any Service Tax for the disputed services. The Tribunal upheld the Appellant's bonafide belief in exemption and applied the principle that if the Appellant was liable to pay Service Tax, the main contractor would also be liable, leading to a revenue-neutral scenario. The Tribunal relied on a previous decision to support the time-barred nature of the demands.

Ultimately, the Tribunal set aside the impugned order, allowing the appeal based on the demands being time-barred. The decision was pronounced on 22.12.2022.