2025 (2) TMI 262 - AT - Service Tax

Exemption from Service Tax under N/N. 45/2010-S.T. dated 20.07.2010 - services rendered by the Appellant in connection with the transmission and distribution of electricity - Appellant acting as a sub-contractor is liable to pay Service Tax even if the main contractor has already paid the Service Tax on the entire amount - Extended period of limitation. Transmission / distribution of electricity - HELD THAT - N/N. 45/2010-S.T. exempts all services rendered in relation to transmission / distribution of electricity from payment of service tax. However it is observed that the Ld. adjudicating authority has not considered the services rendered by the appellant such as Commercial or Industrial Construction Service as related to transmission and distribution of electricity on the ground that they are mainly related to works such as painting/plumbing/sanitary works at electric sub-stations and thus the same could not be considered as services related to transmission and distribution of electricity - the appellant could not produce the work orders at the time of hearing before this Tribunal as they were voluminous in nature but expressed their willingness to produce the same before the adjudicating authority for re-examining the eligibility of the said notification along with the respective work orders. Thus it is opined that this issue needs to be re-examined by the adjudicating authority afresh after verification of the work orders related to transmission and distribution of electricity. Commercial or Industrial Construction Service - supply of tangible goods service - service rendered as a sub-contractor - HELD THAT - Even if the main contractor pays Service Tax on the full amount the sub-contractor shall be liable to pay Service Tax for the services rendered by them to the main contractor. The appellant has not produced the work orders wherein they have rendered the service as a sub-contractor. If the services are rendered after issue of the clarification by the Board then the appellant is liable to pay service tax as a sub-contractor even if the main contractor pays the service tax. However at the time of hearing before this Tribunal the appellant could not produce the work orders wherein they have rendered the services as a sub-contractor - this issue needs to be re-examined by the adjudicating authority afresh on the basis of our observations supra after verification of the work orders where the appellant rendered the services as a sub-contractor. The adjudicating authority needs to examine the issue on the basis of the documentary evidences produced by the appellant in this regard. The same view has been held by the Larger Bench of the Tribunal in the case of Commissioner of Service Tax New Delhi v. M/s. Melange Developers Pvt. Ltd. 2019 (6) TMI 518 - CESTAT NEW DELHI-LB wherein it has been held that a sub-contractor is liable to pay Service Tax even if the main contractor pays service tax on the entire value. Applicability of extended period of limitation - HELD THAT - The issue regarding applicability of extended period of limitation has to be examined with respect to the facts and circumstances of each case separately. In this case the adjudicating authority is required to examine whether the appellant has actually rendered the services in the capacity of a sub-contractor or not and the period involved to take a decision as to whether extended period of limitation can be invoked or not. For the above purposes of verification the issue needs to be remanded back to the adjudicating authority. In respect of the demands confirmed under the categories such as site formation clearance excavation and earth moving and demolition service Goods Transport Agency Service Rent-a-cab service construction of residential complex service etc. it is observed that the appellant has not offered any specific explanation regarding the nature of service rendered by them and their service tax liability on such services. Considering the fact that the work orders relating to these services are overlapping with other services in the work orders it is opined that this issue needs to be re-examined by the adjudicating authority afresh after verification of the work orders. Conclusion - i) The eligibility for exemption needs to be re-examined by the adjudicating authority after verifying the work orders. ii) The sub-contractors are liable for Service Tax even if the main contractor has paid the tax and remanded the issue for verification of work orders. iii) The applicability of the extended period should be examined based on the case s specifics. Appeal disposed off by way of remand.

2019 (6) TMI 518 - AT

ISSUES PRESENTED and CONSIDERED

The core legal issues considered in this judgment are:

Whether the services rendered by the Appellant in connection with the transmission and distribution of electricity are exempt from Service Tax under Notification No. 45/2010-S.T. dated 20.07.2010.
Whether the Appellant, acting as a sub-contractor, is liable to pay Service Tax even if the main contractor has already paid the Service Tax on the entire amount.
Whether the extended period of limitation can be invoked for the demand of Service Tax.
Whether the Appellant is liable for Service Tax under various service categories such as site formation, clearance, excavation, earth moving, demolition services, and others.

ISSUE-WISE DETAILED ANALYSIS

1. Exemption under Notification No. 45/2010-S.T. for Services Related to Transmission and Distribution of Electricity

Legal Framework and Precedents: Notification No. 45/2010-S.T. exempts services related to the transmission and distribution of electricity from Service Tax.
Court's Interpretation and Reasoning: The Tribunal noted that the exemption applies to all services related to transmission and distribution of electricity. The adjudicating authority had not adequately considered whether the services provided by the Appellant, such as 'Commercial or Industrial Construction Service,' were related to transmission and distribution.
Key Evidence and Findings: The Appellant failed to produce work orders during the hearing, which are necessary to substantiate their claim for exemption.
Application of Law to Facts: The Tribunal found that the adjudicating authority needs to re-examine the eligibility for exemption based on the work orders.
Conclusion: The issue was remanded back to the adjudicating authority for re-examination with the necessary documentation.

2. Liability of Sub-Contractors for Service Tax

Legal Framework and Precedents: As per Circular No. 96/7/2007-S.T., sub-contractors are liable to pay Service Tax even if the main contractor pays the tax on the entire amount.
Court's Interpretation and Reasoning: The Tribunal emphasized that the sub-contractor is a taxable service provider, and their services are considered input services, which are taxable.
Key Evidence and Findings: The Appellant did not provide work orders to prove their role as sub-contractors.
Application of Law to Facts: The Tribunal held that the Appellant is liable for Service Tax as a sub-contractor, subject to verification of work orders.
Conclusion: The issue was remanded for re-examination by the adjudicating authority.

3. Extended Period of Limitation

Legal Framework and Precedents: The applicability of the extended period of limitation depends on the facts and circumstances of each case.
Court's Interpretation and Reasoning: The Tribunal did not provide a definitive ruling on this issue but indicated that it should be examined by the adjudicating authority based on the evidence.
Conclusion: The issue was remanded for further examination.

4. Liability under Other Service Categories

Legal Framework and Precedents: The Appellant's liability under various service categories needs to be determined based on specific work orders.
Court's Interpretation and Reasoning: The Tribunal observed that the Appellant did not provide specific explanations for these services.
Conclusion: The issue was remanded for re-examination by the adjudicating authority.

SIGNIFICANT HOLDINGS

Exemption under Notification No. 45/2010-S.T.: The Tribunal held that the eligibility for exemption needs to be re-examined by the adjudicating authority after verifying the work orders.
Liability of Sub-Contractors: The Tribunal upheld that sub-contractors are liable for Service Tax, even if the main contractor has paid the tax, and remanded the issue for verification of work orders.
Extended Period of Limitation: The Tribunal indicated that the applicability of the extended period should be examined based on the case's specifics.
Remand for Re-examination: The Tribunal remanded all issues back to the adjudicating authority for fresh examination with the necessary documentation.