2023 (12) TMI 749 - AT - Service Tax

Non-payment of service tax - sub contractor towards Survey and Exploration of Minerals service - wilful suppression or fraud or noncompliance on the part of this Appellant - HELD THAT - It is an admitted fact that Appellant was registered with the Department and have been filing their returns regularly and maintained proper books of accounts. Further, judicial notice also taken that during the relevant period, it was the general understanding that service tax in case of work done by sub-contractor, is payable either by the sub-contractor or by the principal contractor and not by both. Further, the said issue was highly controversial as to liability of the sub-contractor to pay service tax, under the admitted facts that the main Contractor have discharged the tax liability. The said issue was referred to Larger Bench of this Tribunal in COMMISSIONER OF SERVICE TAX VERSUS MELANGE DEVELOPERS PVT. LTD. 2019 (6) TMI 518 - CESTAT NEW DELHI-LB wherein it was held that although service tax being a destination tax liability, is only chargeable once on a transaction; But, in view of the mechanism of Cenvat credit available under the Cenvat Credit Rules, service tax can also be demanded from the Sub- Contractor, even if Main Contractor has paid, but at the same time, the Main Contractor shall be entitled to take Cenvat Credit of the tax paid by the Sub- Contractor. Appeal allowed on the ground of limitation and the impugned order set aside.

Summary

Issues involved: Whether the Show Cause Notice was rightly issued invoking the extended period of limitation.

Summary:
The Appellant filed an appeal against the Order-in-original confirming a demand for non-payment of service tax as a sub-contractor for "Survey and Exploration of Minerals" service. The Appellant received an amount from Main Contractors and the demand was confirmed along with interest and penalties. The Appellant argued that they were registered, maintained proper accounts, and had paid admitted taxes. They believed the Main Contractors were responsible for service tax payment. The Revenue contended that the impugned order should be upheld.

Upon considering the contentions, it was noted that the Appellant was registered, filed returns regularly, and the issue of tax liability for sub-contractors was controversial during the relevant period. A judgment by a Larger Bench clarified that service tax could be demanded from the Sub-Contractor even if the Main Contractor had paid, with the Main Contractor entitled to take credit. In light of these findings, the appeal was allowed on the ground of limitation, and the impugned order was set aside with consequential benefits as per the law.