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TMI Blog2014 (10) TMI 525X X X X Extracts X X X X X X X X Extracts X X X X ..... TMI 524 - CESTAT MUMBAI (LB)] by this Tribunal is not binding and held per incuriam as the same is directly in the teeth of the ruling of the Apex Court and is passed without taking notice of the aforementioned ruling of the Hon'ble Supreme Court - Decided against Revenue. - Appeal No.ST/36/09 - Final Order No. A/1293/2014-WZB/C-IV(SMB) - Dated:- 12-8-2014 - Anil Choudhary, J. For the Appellant : Shri N N Prabhudesai, Supdt. (AR) For the Respondent : Shri Bharat Raichandani, Adv. JUDGEMENT Per: Anil Choudhary: The Revenue is in appeal against Order-in-Appeal No. P-III/192/08 dated 23.10.2008 passed by the Commissioner of Central Excise (Appeals), Pune-III. 2. The brief facts of the case are that the assessee-respondent is a service provider and is registered with the Central Excise Department under the category of Commercial or Industrial Construction Service . M/s Devi Constructions Co. Pvt. Ltd. sub-contracted some of their civil work undertaken for their client to the respondent. The respondent claims that both M/s Devi Constructions and the respondent paid Service Tax on the same transaction. The tax was paid as per Notification No. 1/2006 dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ub-contractor of M/s Devi Constructions and as a main contractor, Devi Construction has also paid the taxes. The service tax was not again chargeable from the respondent assessee, as the charging provisions Section 66 of the Finance Act, 1994, 1994 does not provide to charge the same transaction twice, both by the main contractor and the sub-contractor. Further finding was recorded that the main contractor have discharged the tax liability, sub-contractor i.e. the respondent herein was under no obligation to discharge the liability of Service Tax. It was further noticed that the tax paid by the respondent assessee was not reimbursed by his main contractor and has been shown in the Books of account of the respondent as receivable. Further reference was made to the Trade Notice No. 5/98 dated 14.10.1998 and Trade Notice No. 53-CE (Service Tax)/97 dated 1.7.1997, the ground of which is that the main contractor is liable to pay tax in respect of the sub-contracted service provided that sub-contracting is of the same service category. Further reliance was placed on the ruling of the Division Bench of this Tribunal in the case of Evergreen Suppliers Vs. Commissioner of Central Excise, Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provided to any person, by any other person, in relation to service to main contractor, is essentially a taxable service provider. The fact that the service provided by such sub-contractor are used by the main service provider for completion of the work, does not in any way alter the fact of providing of taxable service by the sub-contractor and accordingly, the respondent assessee as a sub-contractor is liable to pay Service Tax and the same was correctly paid by the respondent. 3.1 The next ground raised is that the learned Commissioner (Appeals) has overlooked the Board's Circular No. 96/7/2008-ST dated 23.8.2007, wherein it was clarified that sub-contractor is essentially a taxable service provider and accordingly, liable to pay Service Tax. 3.2 The next ground is that the respondent have not recovered Service Tax paid by the main contractor and also if they have not passed on the burden of Service Tax on the customers or any other person, is for the reason that the main contractor M/s Devi Constructions, wants to avail the benefit of exemptions Notification No. 1/2006 dated 1.3.2006, wherein a condition is provided that notification shall not apply in case, where th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal in this regard. Accordingly, we reject this contention raised by the appellant in toto. There was a Difference of Opinion, in which the Member (Judicial), myself, has held at para 10.1 as follows:- 10.1 It is noteworthy that works-contract have been made taxable w.e.f. 01.06.2007 under Section 65 (105) (zzzza). It is seen that the appellant have accepted the liability under the head 'commercial or industrial construction'. It is further seen that the appellant have discharged liability to Service Tax where it is the main contractor. Only where the appellant have worked as a sub-contractor, it have not paid after confirming from the main contractor. Further the appellant have paid tax as sub-contractor till 28.02.2006. Thereafter w.e.f. 01.03.2006 Notification No. 15/04, was replaced by Notification No. 01/2006, which prohibited availment of CENVAT credit on inputs if abatement of 67% on materials is claimed. Accordingly, as advised, the appellant stopped paying Service Tax as a sub-contractor w.e.f. 01.03.2006, to avoid double taxation. The appellant relied on the beneficial circular(s) and rulings noticed above. As the position was clarified by Revenue vide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he circulars in general. It is only when Board changes its view on a issue consequent to the decision of the Hon'ble Supreme Court, Hon'ble High Court or this Tribunal or for some other reason that the circulars are modified or superseded. However, the circulars are to be applied only as per law as it exists at that point of time and with reference to the commodity/services. This is true even in case of service tax. In 2007 an initiative was taken by the Board so that circulars in respect of various services were consolidated in one single circular, known as master circular. At that point of time it was also realized that the large number of circulars have lost their relevance long back due to amendment in the law. Accordingly, such circulars were not part of the new master circular or were stated to be withdrawn. At that point, a general clarification as under was issued- 999.03 /23.08.07 A taxable service provider outsources a part of the work by engaging another service provider, generally known as sub-contractor. Service tax is paid by the service provider for the total work. In such cases, whether service tax is liable to be paid by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of specific services. These clarifications were not clarifying any legal interpretation or any provisions of Act/Rule but more were in the administrative nature to sort out cascading effect on service tax. Perhaps, a better way would have been to issue notification achieving the same objective. Be that it may be, this Tribunal cannot be extended the scope of such circulars to other services, particularly which were not in existence at that time. Service tax law has been extended to a large number of services from 2002 onwards and scheme of Cenvat Credit was extended to services, no such circular has been issued in respect of any of the services which became taxable in 2002 or afterwards. Even in respect of services which were taxable before 2002, the earlier circulars became redundant in view of the change in law. Learned Advocate's argument that the old circulars were withdrawn only with the issue master circular on 23.8.2007 is not relevant at all, particularly in view of the fact that the service being dealt in the present case is Commercial or industrial construction service which become taxable when the Cenvat credit scheme was already available. The four circulars whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice Tax, the matter was remanded to the adjudicating authority, who shall examine in the light of the evidence available on record or on basis of documentary evidence, which the appellant shall submit before the adjudicating authority. The Service Tax demand was directed to be recomputed thereafter in accordance with law. 3.5 Thus, relying on the aforementioned order in the case of Suni Hi-Tech Engineers Ltd. (supra), the Revenue prays for allowing its appeal. 4. The learned Counsel for the respondent argues that the Service Tax is destination based tax and the very charging Section 66 of the Finance Act, 1994 provides there shall be liability of tax (herein referred to as Service Tax) @12% of the value of taxable services referred to in various sub-clauses of clause (105) of Section 65 and collected in such manner as may be prescribed, provided that the provisions of the Section 66 shall not apply w.e.f. 1.7.2012 vide Notification No. 22/2012-ST dated 5-6-2012. 4.1 Thus, from the plain reading, it is evident from Section 66 that the charging section does not provide for multi-point taxation rather provides for destination based taxation and accordingly, the tax cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxation. It was further rejected by the Commissioner (Appeals) that the Viral Builder was at liberty to utilize credit and utilize the same to satisfy the exemption condition of Notification No. 1/2006 and to avail concessional tax on the final services provided by it and the same service for which the contractor had procured an order, does not stand actually provided by it but is passed on to sub-contractor, who provided the actual services. It cannot be said that contractor is liable pay the duty on the same. Service definitely stands provided only once. As such by no stretch of imagination service tax in respect of the same service can be paid for the second time. It is not a case where the service provided by sub-contractor is further used by him for providing services to his buyers (principal). As such, the example of inputs being used in the final product and both leviable to excise duty is not for the purpose of Service Tax. Further, it was noticed that admittedly, the service in the present case was provided by sub-contractor through the main contractor i.e. Viral Builder. It stands clarified by the Board that there cannot be double taxation in cases where services are re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estion which the Court was required to answer was as to whether the goods supplied by the sub-contractor occurred in the form of single deemed sale or multiple deemed sales, The Hon'ble Supreme Court observed that the issue stands clarified in ruling of the Builder's Association of India - 1989 73 STC 370 =, wherein it was held that ordinarily unless there is a contract to the contrary in the case of works contract the property in the goods used for construction passes to the owner of the land on which the building is constructed, when the goods or materials used are incorporated in the building . As per the Revenue, there are two deemed sales, one between the main contractor and contractee and the other between sub-contractor and the main contractor, in the event of the contractee not having any privity of contract with the sub-contractor. The Hon'ble Supreme Court in this ruling held that there is only one sale and only one transaction of the property in the goods and observed as follows:- 19. If one keeps in mind the above quoted observation of this Court in the case of Builders' Association of India (supra) the position becomes clear, namely, that even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the denial of credit to be taken by the service provider as the main contractor, of the Service Tax paid by its sub-contractor is against the charging section and accordingly, should be held to be unenforceable in the facts and circumstances. 4.5 The respondent further relies on the ruling dated 18.3.2013 by the Division Bench of this Tribunal in the case of JAC Air Services Pvt. Ltd. Vs. Commissioner of Service Tax, Delhi - 2013 (31) STR 155 (Tri-Del) which have considered most of the aforesaid decisions, wherein the facts were, in respect of cargo handling services, M/s JAC Air Services was a sub-contractor under agreement with Airport Authority of India for Cargo Handling Services at Delhi International Airport and had rendered cargo handling service. The Service Tax liability was discharged by AAI and the Revenue had held the sub-contractor JAC Air Services also liable to pay the tax as sub-contractor for the second time. It was held that Service Tax cannot be demanded for the second time from the sub-contractor. 5. Having considered the rival contentions, I find that the Notification No. 1/2006-ST is in confrontation with the charging section, Section 66 of the Financ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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