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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 ..... the activity of the appellant was supply of skilled and unskilled labour for carrying out the work such as shifting, erection, pre-assembly, testing and commissioning of pressure parts & non-pressure parts of boiler at project sites. It was argued that the appellants were merely supplying the labour under the supervision and control of the main contractor. 2.1. He further argued that the main contractor has paid tax on the entire value and therefore no demand of service tax can be made against the sub-contractors, relied on the following trade notices. (A) Trade Notice No. 7/97-ST dated 4.7.1997, Mumbai Commissionerate-I (B) Trade Notice No. 7/97-ST dated 13.10.1998, Mumbai Commissionerate (C) Trade Notice No. 1/96-ST dated 31.10.1996, Mumbai Commissionerate (D) Trade Notice No. 1/96-ST dated 31.10.1996, Mumbai Commissionerate (E) Ministrys Letter F. No. B-II/I/2000-TRU, dated 09.07.2001 (F ) M.F. (D.R.) Circular No. 23/3/97/ST dated 13.10.97. On the strength of above circular he argued that the intention of the Government has always been main contractor of service tad on the entire contract value, the sub-contractor need not pay service tax. He argued that in these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The identical issues were raised and the same have been decided by vide Order No. A/90344/17/STB dt. 30.10.2017 in the said order following has been observed: "4. We have gone through the rival submissions. 4.1 The first issue that we examine is if there will be a revenue loss to government or this is a revenue neutral situation. The main contractor is involved in Erection Commissioning and Installation service. In respect of this service the tax liability is governed by the notifications 19/2003-ST and 01/2006-ST which read as follows - notifications 01/2006-ST In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994) (hereinafter referred to as the Finance Act), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts the taxable service of the description specified in column (3) of the Table below and specified in the relevant sub-clauses of clause (105) of section 65 of the Finance Act, specified in the corresponding entry in column (2) of the said Table, from so much of the service tax leviable thereon under section 66 of the said Finance Act, as is in excess of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting the very purpose of the notification and will also result in loss of revenue to the government. The scheme of Cenvat is designed in such a manner that every service provider is liable to pay service tax. The service receiver, if engaged in provision of taxable service can claim Cenvat Credit of the service. Service tax paid by the input service provider/sub-contractor by providing this mechanism Government had ensure that there is no double taxation and no cascading effect of tax. However, there are certain services in respect of which special dispensation has been provided. In such cases the abatement from value is given subject to condition that no credit of input and input services is taken. In such cases, the tax paid by the input service provider/sub-contractor is not allowed Cenvat Credit to the final service provider. The present 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the service provider known as sub-contractor who undertakes only part of the whole work. A sub-contractor is essentially a taxable service provider. The fact that services provided by such sub-contractors are used by the main service provider for completion of his work does not in any way alter the fact of provision of taxable service by the sub-contractor. Services provided by sub-contractors are in the nature of input services. Service tax is, therefore, leviable on any taxable services provided, whether or not the services are provided by a person in his capacity 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 u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the present case is Commercial or industrial construction service which become taxable when the Cenvat credit scheme was already available. The four circulars which were issued in 1997-1998, in respect of four specified services were in any case redundant even in respect of those four services from 2002 onwards. In 2007, all that was clarified was that sub-contractor is also a service provider, and is liable to pay tax. 19. I also note that in the present case the appellant had no doubt about the provisions of law and the fact that his activity was chargeable to service tax. This is evident from the fact that the appellant was paying service tax before 1-3-2006. From 1-3-3006 the reason for stopping to make payment is only that the main contractor was 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal in the case of Akruti Projects (supra), it is seen that the entire findings of the said decision are reproduced below: 5. Having considered the rival contentions, I find that the Notification No. 1/2006-S.T. is in confrontation with the charging section. Section 66 of the Finance Act, 1994 and accordingly I hold the same is not applicable in the facts and circumstances of the case so far as the condition relating to not taking of Cenvat credit is concerned of the Service Tax paid by the sub-contractor. Further, I notice that the finding of fact recorded by the adjudicating authority having not been challenged by any of the parties, and in view of the categorical finding of fact recorded, I hold that the respondent assessee is entitled to refund 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in ruling of the Builders 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and belonging to the owner of the land then immediately on such construction, the property of the goods passes to the owner of the land. Thus, when a sub-contractor does construction work on a land, the propriety passes to the owner of the land immediately on construction. These are peculiar facts with reference to the works contract involving construction on land. This argument would not apply to the provision of service as there is no property transaction taking place which involves direct transfer from sub-contractor to the main recipient of service. In the instant case, the appellants are involved in providing services to the main contractor which they claimed to be a sub-contract. The appellants are providing services to the main 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 directl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stion has been raised whether the film producer is also liable topay service tax on the documentary or film prepared by him in relation to an advertisement. In this connection, it is relevant to note that taxable service is a service provided to a client by an advertising agency in relation to advertisement in any manner. Client is the advertiser. Therefore, in this case the advertising agency cannot be considered as a client when the definition of taxable service in relation to advertisement is interpreted in proper context. Accordingly, it is clarified that a film producer in this case is not liable to service tax. However, producer in this case is not liable to service tax. However, the advertising agency will no doubt 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 Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. Board is of the view that no service tax is again chargeable on rent and access charges paid to DOT by cellular phone operators. A perusal of the above circular clearly indicates that the services in respect of which the clarification has been issued relates to the services where the exercise is revenue neutral. In all these cases the main provider of service is put to tax on full value and in those circumstances if the sub-contractor/input service provider pays any service tax, the same is available as credit to the main service provider. 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 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 in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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