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TMI Blog2018 (3) TMI 356X X X X Extracts X X X X X X X X Extracts X X X X ..... of the land. Moreover the nature of services provided by the appellants to the main contractor is not the same as those provided by the main contractor to its client. Whether rent and access charges for providing junctions for mobile operation to cellular telephone operators by DOT will be subject to no service tax? - Held that: - Cellular phone operators are realizing rent and access charges from their subscribers and as such when cellular companies pay service tax on the amounts received by them from their subscribers it includes rent and access charges and as such to charge again service tax on their charges by DOT will amount to double taxation. Board is of the view that no service tax is again chargeable on rent and access charges paid to DOT by cellular phone operators. It is apparent that these circulars were intended to reduce un-necessary work and not to provide exemption or give away revenue. In the instant case however, the main contractor is not entitled to the credit of service tax paid by sub-contractor if he is availing N/N. 01/2006. Thus any service tax paid by the subcontractor would come as revenue to the Government and no credit of same would be available ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e circumstances there would be no revenue loss to the government, as the government has already recovered service tax of the entire value of contract from the main contractor. 2.2. Ld. Counsel relied on the decision of Tribunal in case of BBR India Ltd. Vs. CCE 2006 (4) STR 269 wherein following has been observed: .......liability to pay service tax to the Government is on the prime consultant and not on the sub-consultant, who is the appellant and the appellant is not liable to pay service tax demanded . On this count Ld. Counsel argued that the entire exercise is revenue neutral. 2.3. Ld. Counsel further argued that the demand has been raised on the entire value of the contract which includes consideration for material supplied as well as services rendered. He argued that no demand can be made in respect of the consideration received pertaining to supply of material. Ld. Counsel further sought benefit of cum duty price in calculation of service tax. 2.4. Ld. Counsel further argued that extended period of limitation is not invokable as there was no deliberate mis-declaration on their part. He relied on the decision of Hon ble Apex Court in the case of Pushpam Pha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance Act, as is in excess of the service tax calculated on a value which is equivalent to a percentage specified in the corresponding entry in column (5) of the said Table, of the gross amount charged by such service provider for providing the said taxable service, subject to the relevant conditions specified in the corresponding entry in column (4) of the Table aforesaid : S. No. Sub-clause of clause (105) of Section 65 Description of taxable service Conditions Percentage (1) (2) (3) (4) (5) 5. (zzd) Erection, commissioning or installation, under a contract for supplying a plant, machinery or equipment and erection, commissioning or installation of such plant, machinery or equipment. This exemption is optional to the commissioning and installation agency. Explanation. - The gross amount charged from the customer shall include the value of the plant, machinery, equipment, par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t case is an example of one such situation. For provision of any output service numerous inputs services are required. For example, a consultant providing consultancy would receives input services in nature of (i) renting of immovable property service (ii) Air Travel services (iii) Business Support Service (iv) Manpower supply service (v) renting a cab services and so on. If the consultant is paying tax on the entire value of service provided by him, then would all services provider listed become exempt from paying service tax as sub-contractor.If the argument of the appellant is accepted then every provision of services to another taxable service provider would not be liable to payment of service. This situation can only lead to chaos. 4.2 This very issue has been dealt with in the case of one of the main contractors by the tribunal. The tribunal has dealt with the question regarding the circular issued by the CBEC in this regard and also the liability under these circumstances. We find that the Tribunal in the case of Sunil Hi-Tech Engineers Ltd. - 2014 (36) STR 408 (Tri-Mum) has observed as follows: 18. I have carefully gone through the various arguments advanced by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as a sub-contractor and whether or not such services are used as input services. The fact that a given taxable service is intended for use as an input service by another service provider does not alter the taxability of the service provided. At times circulars are also used by the Board to take care some administrative difficulties in the administration of tax as particular way of implementation may cause undue hardship. Service tax was introduced in 1994 on three services, in 1996 another three services were added and in 1997 additional three services were brought under the service tax net. At that point of time service tax was not covered by Cenvat credit system i.e. credit of input services or inputs was not available while providing any other output service. Around 2002, concept of Cenvat credit was extended to the services and in 2004 it was extended to the manufacturing and service sector both in a unified manner. In 1997-1998, at the time of introduction of specific services it was realized that in respect of certain services main service provider appoints certain sub-service provider, who may be doing part of the main service and since concept of Cenvat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specifically made ineligible to take credit of input services vide Notification No. 1/2006. In my opinion if law specifically prohibits doing something, the same cannot be circumvented by stopping to pay duty and claiming benefit of circulars which were not issued even in respect of that service and was also prior to the law at the relevant time i.e. introduction of Cenvat credit scheme to services. Learned Advocate has stated that there is no rationale to restrict the credit of input services in 2006. The Learned Advocate has also stated that it was unintentional. I am unable to subscribe to this argument. If at all, restriction on input service credit was unintentional, the same would have been amended within a gap of few weeks or months. The fact remains, the said restriction has not been lifted in all these years. This therefore cannot be called as unintentional or unreasonable restriction. In fact, perhaps the position prior to 1-3-2006 was unintentional as the contractors were able to reduce their tax liability by creating more than 2 or 3 levels of sub-contractors. This contention/argument of the ld. Advocate therefore does not hold water. In any case, the Tribunal is requi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and accordingly, the appeal of the Revenue is dismissed. 5.1 In view of the ruling of the Hon ble Apex Court in the case of L T Ltd. (supra), I hold that opinion of the third member as rendered in the case of Sunil Hi-tech Engineers Ltd. (supra) 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. It is seen that the decision of the Tribunal in the case of Akruti Projects (supra) essentially relied on the decision of the Hon ble Apex Court in the case of Larsen Toubro Ltd. -2006-TIOL-327-HC-HYD-VAT. In para 4.2 and 4.3the extract of said decision have been placed which reads as follows: 4.2 The appellant further relies on the ruling dated 12-10-2006 in the case of Larsen Toubro Ltd. v. State of Andhra Pradesh - 2006-TIOL-327-HC-HYD-VAT, wherein it has been held that when a contractor awards either wholly or partially, the contractual obligation to a sub-contractor there is another agreement between the contractor sub-contractor, which is pro tanto identical in nature with the agreement between ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 if there is no privity of contract between the contractee and the sub-contractor, that would not do away the principle of transfer of property by the sub-contractor by employing the same on the property belonging to the contractee. This reasoning is based on the principle of accretion of property in goods. It is subject to the contract to the contrary. Thus, in our view, in such a case the work, executed by a sub-contractor, results in a single transaction and not as multiple transactions. This reasoning is also borne out by Section 4(7) which refers to value of goods at the time of incorporation in the works executed. In our view, if the argument of the Department is to be accepted it would result in plurality of deemed sales which would be contrary to Article 366(29A)(b) of the Constitution as held by the impugned judgment of the High Court. Moreover, it may result in double taxation which may make the said 2005, Act vulnerable to challenge as violative of Articles 14 (1)(g) and 265 of the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contractor and not the owner of the land. Moreover the nature of services provided by the appellants to the main contractor is not the same as those provided by the main contractor to its client. 4.4 The appellants are relied on various trade notices issued by various Commissionerate. The following are the trade notices: a) Trade Notice No.7/97-ST dated 04/07/1997, Mumbai Commissionerate-I - 2.4. The services should be rendered to a client directly and not in the capacity of a sub-consultant/associate consultant to another consulting engineer, who is the prime consultant. In case services are rendered to the prime consultant, the levy of the service tax does not fall on the sub-consultant but it falls on the prime or main consulting engineer who raises a bill on his client (which includes the charge for services rendered by the sub-consultant. b) Trade Notice No.7/98-ST dated 13/10/1998, Mumbai Commissionerate: - 4.6 Further, in cases where an architect/interior decorator sub-contracts part/whole of his work to another architect/interior decorator, it is clarified that no service tax is required to be paid by the sub-contractor provided that the principal archit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bt include the expenses incurred on getting the film or documentary will bed collected by the agency. It goes without saying that if the film producer chooses to charge the client directly for the film or documentary produced by him then the film producer is to be regarded as having rendered service to the client in relation to advertisement and he will therefore, be liable to pay service tax accordingly. d) Trade Notice No.1/96-ST dated 31/10/1996 Mumbai Commissionerate: - 5 In this context, it is clarified that co-loaders provide service to the courier agencies as such. They do not provide directly any service to the customer who gives the documents, goods or articles to the courier agency for their delivery to the consignee. What is chargeable to service tax is the service provided by courier agency to the customer. In this case, the courier agency being not a customer as such, the service provided by co-loader to the courier agencyis not chargeable to service tax. It is significant to point out that the charges of the co-loaders to the courier agency for in-transit movement of goods, documents or articles are in any case ultimately recovered by the courier agency from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase however, the main contractor is not entitled to the credit of service tax paid by sub-contractor if he is availing notification No.01/2006. Thus any service tax paid by the subcontractor would come as revenue to the Government and no credit of same would be available to the main contractor. Relying of aforesaid decision in identical circumstances we find that the appeal fails on merit. 5. In so far as the issue of limitation is concern, it is seen that the appellant have not disclosed the information relating to these services in their half yearly return. Failure to submit this information in the half yearly return clearly points to mis-declaration on behalf of the appellant. There is no general principle that all sub-contractors are exempted from the tax if the main contractor has discharged the tax. In this specific case to the appellant have not produces any grounds for reaching the belief that they are not liable to service tax being sub contractors. The cenvat chain is generally made in a manner that all the persons providing service to others can claim cenvat credit. It results in a revenue neutral situation as the receiver of the service is entitled to take credit. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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