2024 (12) TMI 1364 - AT - Service Tax

Liability to pay service tax on SBM hiring charges, CHA charges, loading charges, GMB shipping fee in respect of user of Reliance SBM at Hazira by ONGCL for transportation of naphtha to OPAL SEZ unit at Dahej - demand confirmed on the ground of ONGCL not having followed the procedure under N/N.12/2013-ST for availing exemption from payment of service tax - HELD THAT - Firstly, the service was provided by the reliance for use of their SBM and reliance has admittedly paid the service tax. The appellant have simply raised the invoice for the reimbursement of the actual amount paid by them to the reliance. Therefore, the appellant is not the service provider whereas they are the service recipient and therefore, they are not liable to pay service tax. Secondly, the demand of service tax on service which has already suffered the service tax is demanded twice on the same service which is not permissible. Thirdly, though the appellant have issued the invoices initially but the same were reversed subsequently, as contract with OPAL was amended retrospectively and consequently, the appellant did not receive any consideration for these so called services. In this position, as per the retrospective amendment in the contract, no consideration exist, therefore in absence of any consideration the service tax demand is absolutely illegal, unconstitutional and incorrect. Levy of penalty - HELD THAT - Since, the penalty is consequential to the demand which is non-existent as per this order, question of any penalty does not arise. Hence, the Revenue s appeal is without any substance. Service tax cannot be levied twice for the same service, and in the absence of consideration, a service tax demand is invalid - the demands made in the impugned order is not sustainable. Appeal allowed.

1. ISSUES PRESENTED and CONSIDERED

The core legal questions addressed in this judgment are:

Whether the appellant is liable to pay service tax on SBM hiring charges, CHA charges, loading charges, and GMB shipping fees, considering that the actual service provider, Reliance, has already discharged the service tax.
Whether the issuance of invoices by the appellant, which were later reversed due to a retrospective amendment in the contract with OPAL, affects the liability for service tax.
Whether the demand for service tax is permissible when the service tax has already been paid by another party for the same service.
Whether the absence of consideration due to the retrospective contract amendment negates the service tax demand.
Whether the Revenue's appeal for the revision of penalty is valid when the demand itself is set aside.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Liability for Service Tax on Charges

Relevant Legal Framework and Precedents: The appellant argued that they are not liable for the service tax as the actual service provider, Reliance, had already paid it. The appellant cited several precedents to support their stance.
Court's Interpretation and Reasoning: The court noted that the service was provided by Reliance, and they had paid the service tax. The appellant merely raised invoices for reimbursement, making them a service recipient, not a provider.
Key Evidence and Findings: It was undisputed that Reliance collected and remitted the service tax to the government.
Application of Law to Facts: The court applied the principle that service tax cannot be demanded twice for the same service.
Treatment of Competing Arguments: The Revenue's reiteration of the original order was not found persuasive.
Conclusions: The appellant is not liable for the service tax on the charges in question.

Issue 2: Impact of Reversed Invoices

Relevant Legal Framework and Precedents: The appellant argued that since the invoices were reversed, no consideration was received, negating the tax liability.
Court's Interpretation and Reasoning: The court agreed, noting that the retrospective amendment in the contract meant no consideration existed.
Key Evidence and Findings: The contract amendment was a crucial factor leading to the reversal of invoices.
Application of Law to Facts: Without consideration, the service tax demand was deemed illegal and incorrect.
Treatment of Competing Arguments: The Revenue did not effectively counter the appellant's argument regarding the absence of consideration.
Conclusions: The absence of consideration due to the contract amendment invalidates the service tax demand.

Issue 3: Revenue's Appeal for Penalty Revision

Relevant Legal Framework and Precedents: The penalty was contingent on the service tax demand.
Court's Interpretation and Reasoning: Since the demand was set aside, the penalty could not be upheld.
Key Evidence and Findings: The court found no substance in the Revenue's appeal for a penalty.
Application of Law to Facts: The non-existence of the demand rendered the penalty moot.
Treatment of Competing Arguments: The Revenue's appeal lacked merit following the dismissal of the demand.
Conclusions: The appeal for penalty revision is dismissed.

3. SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning: "The demand of service tax on service which has already suffered the service tax is demanded twice on the same service which is not permissible."
Core Principles Established: Service tax cannot be levied twice for the same service, and in the absence of consideration, a service tax demand is invalid.
Final Determinations on Each Issue: The court set aside the service tax demand and dismissed the Revenue's appeal for penalty revision, allowing the appellant's appeal.

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