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TMI Blog2014 (1) TMI 457X X X X Extracts X X X X X X X X Extracts X X X X ..... ills of the contractors depends upon the terms of contract itself, but since no material has been placed on record in this regard, therefore, this Court cannot be expected to decide such academic and hypothetical questions, which essentially depend upon the intricate terms of the contract. Prima facie, since Section 68(1) of the Act affixed the liability to pay the Service Tax on a person providing the taxable service, the liability to pay such tax would be on the contractors and the Notification No. 30/2012, dated 20-6-2012 dividing the liability to pay such Service Tax to the extent of 50% by both service providers and service receivers, which is issued under Section 68(2) of the Act, quoted above, will not absolutely absolve the petitioner contractors from their liability to bear the entire Service Tax liability - taxable event is the providing of service, which in the present case would be point of time of execution of works contract itself, which is prior to 1-7-2012. Mere payment of such Bills for work already done after 1-7-2012 would not alter the applicability of law as applicable to the petitioner contractors prior to 1-7-2012. For this reason also the action of respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l be paid by the contractor himself. (ii) that w.e.f. 1-7-2007 the works contract services were included within the definition of taxable services under Section 65(105)(zzzza) and in pursuance of the Notification No. 30/2012, dated 20-6-2012 issued under Section 68(2) of the Finance Act, 1994, the Central Government provided the percentage of tax payable by the persons providing services and persons receiving the services. In the said Notification No. 30/2012, dated 20-6-2012, the Central Government has provided that both, the person providing the service and person receiving the service in relation to works contract shall be liable to pay 50% of the Service Tax payable. The contention is that the respondent-Nigam is not entitled to deduct any portion of the Service Tax of 50% of the total Service Tax liability from the payment of bills for work done by the contractors, the members of the petitioner Association, in respect of the contract executed prior to 1-7-2012. He submitted that there is no quarrel that after 1-7-2012 the liability to pay entire Service Tax under the contract has been affixed on the contractor by making specific stipulations in the Tender documents only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f each contract is a matter of individual contract and, therefore, no such common cause arises in the matter so as to be adjudicated in the present writ petition. (ii) that several disputed questions of facts are involved in the present case as to the date of contract, nature of payments to the contractors, nature of bills raised by the contractors, whether the component of Service Tax is included in the Bills or charged separately, whether the respondent-Nigam is liable to pay or reimburse the amount of Service Tax to the contractors or not, arc all individual questions of facts to be decided on the basis of relevant evidence by the concerned authorities of the Department and, therefore, no writ petition can be maintained by the petitioner-Association in this regard. (iii) that admittedly, an arbitration clause exists in each contract and, therefore, dispute, if any, in this regard can be raised before the arbitrator and in view of such alternative remedy available to the petitioner Association or its members, the present writ petition is not maintainable under Article 226 of the Constitution of India. (iv) that under the Reverse Charge Mechanism of Service Tax in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erage Board Ors. - 2003 (4) ALD 489, which would be referred hereinafter. 6. No case law was relied upon by the learned counsel for the petitioner-Association, Mr. Dinesh Mehta in support of his contentions. 7. I have heard the learned counsels for the parties at length and perused the record and relevant statutes and given my thoughtful consideration to the rival submissions. 8. Section 68 of the Finance Act, 1994 as substituted by Finance Act of 1998 w.e.f. 16-10-1998 reads as under :- 68. Payment of Service Tax. - (1) Every person providing taxable service to any person shall pay Service Tax at the rate specified in Section 66 in such manner and within such period as may be prescribed. (2) Notwithstanding anything contained in sub-section (1), in respect of any taxable service notified by the Central Government in the Official Gazette, the Service Tax thereon shall be paid by such person and in such manner as may be prescribed at the rate specified in Section 66 and all the provisions of this Chapter shall apply to such person as if he is the person liable for paying the Service Tax in relation to such service. 9. Section 65(105) of the Act defines taxable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olumn Headings is also reproduced hereunder for ready reference : Government of India Ministry of Finance (Department of Revenue) Notification No. 30/2012-Service Tax New Delhi, the 20th June, 2012 GSR .. (E). - In exercise of the powers conferred by sub-section (2) of Section 68 of the Finance Act, 1994 (32 of 1994), and in supersession of (i) notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 15/2012-Service Tax, dated the 17th March, 2012, published in the Gazette of India, Extraordinary, Part II, Section 3, sub-section (i), vide number G.S.R. 213(E), dated the 17th March, 2012, and (ii) notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 36/2004-Service Tax, dated the 31st December, 2004, published in the Gazette of India, Extraordinary, Part II, Section 3, sub-section (i),vide number G.S.R. 849(E), dated the 31st December, 2004, except as respects things done or omitted to be done before such supersession, the Central Government hereby notifies the following taxable services and the extent of Service Tax payable thereon by the person liable to pay Servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom time to time. 14. Learned counsel for the respondent, Mr. R.K. Agrawal also rightly pointed out that in view of arbitration clause available in the contract, in case of a dispute between the parties to the contract as to who will bear the liability of paying Service Tax and to what extent, such a dispute, first deserves to be raised before the arbitrator under the said contract or in the alternative before the assessing authority under the Act and such questions without any material on record in this regard, merely by some illustrative examples of bills of one of the contractors on a piece of paper, a photocopy of one of the Bills of one such contractor, like the one produced by the petitioner-Association, such academic questions cannot be determined by this Court much less in writ jurisdiction under Article 226 of the Constitution of India. 15. The sheet anchor and foundation of the case in hand of the petitioner-Association that under Clause 36C of the general conditions of contract, the petitioner Association cannot be asked to pay the Service Tax is absolutely misconceived. The said Clause 36C apparently stipulates that the Royalty and other taxes payable to the Gover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -2012 for that matter so as to give any foundation to the petitioner that the respondent-Nigam would reimburse the Service Tax liability to the members of the petitioner-Association. The said Resolution is hedged with the condition of proof of deposit of the same in Govt. treasury, but no such proof has been placed on record by the petitioner Association. 16. The Notification No. 30/2012, dated 20-6-2012 (Annex. 5 on record) vide its Clause 1(v) further provides that the taxable service provided or agreed to be provided in execution of works contract by any individual, Hindu Undivided Family or Partnership Firm, whether registered or not, including Association of Persons, located in the taxable territory to a business entity registered as body corporate, located in the taxable territory will only be covered by said Notification. Therefore, if a limited company is a service provider, the said Notification will not apply and on the other hand, if the awarder of the contract is not a body corporate, again the said Notification will not apply. In the present case, one does not know, whether all the members of the petitioner Association are individual contractors, HUF or Partnership ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an object to prevent the pilferage of Service Tax collected by the contractors and reimbursed to them by the awarders of the contract, which ultimately did not reach the public exchequer. Therefore, to ensure the flow of tax revenue to the extent of 50% from the side of awarders of the contract, like the respondent Nigam and other body corporates, such a provision appears to have been introduced and then to realize the payment of remaining 50% of Service Tax from the contractors trekking them through such details provided by Nigam, who could otherwise simply escape the tax net in the absence of even prior registration and returns filed by such individual contractors. This provision appears to be there to plug the loopholes and check the pilferages of public revenue and the same cannot be faulted and questioned, much less by the petitioner-Association, whose locus to file the writ petition is in serious doubt. 18. The contention of learned counsel for the petitioner-Association, Mr. Dinesh Mehta, based on Chief Controller of Accounts letter Annex. 8, dated 6-7-2012 is also equally devoid of merit. The same is merely an intra-departmental communication asking the authorities to co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion clause, in the agreement, either party can avail the remedy of arbitration/conciliation. 20. Similarly, the Hon ble Apex Court in All India Federation of Tax Practitioners Ors. v. Union of India Ors. - (2007) 7 SCC 527 = 2007 (7) S.T.R. 625 (S.C.) explained the concept of Service Tax and its difference from the tax levied on the goods and held as under- Service Tax is a value added tax. Value addition is on account of the activity like planning, consultation, advising etc. It is an activity, which provides value addition as in the case of manufacturer of goods, which attracts Service Tax. In the present case, tax falls on the activity which is the subject-matter of Service Tax. Service Tax is on profession based services itself. It is on professional advice, tax planning, auditing, costing, etc. Tax becomes payable on each of the exercises undertaken. The word service in place of goods by applying the principle of equivalence. Under the Act, the Taxable Event is each exercise undertaken by the service provider in giving advice on tax planning, auditing, costing etc. It is the said principle of equivalence which equates Service Tax to the Central Excise Duty, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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