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TMI Blog2021 (8) TMI 1117X X X X Extracts X X X X X X X X Extracts X X X X ..... actor is liable to pay the Service Tax even if the main contractor has discharged the liability. The issue on merits is found against the assessee and in favour of the Department. Extended period of limitation - penalty - HELD THAT:- There is no clear allegation that the appellants have wilfully suppressed facts with the intention to evade payment of Service Tax. In the present case, the main contractor / M/s. ACL collected the full consideration including Service Tax from the clients, which is clear from the records. Appellants from the very beginning have raised the contention that they were instructed by M/s. ACL that they are not required to pay the Service Tax - there are no factual basis for invoking the extended period. Appeal fails on merits - However, we hold that the demand for the extended period of limitation, if any, cannot sustain and the impugned order to this extent is set aside, without disturbing any demand that falls within the normal period. Decided partly in favor of assessee. - Service Tax Appeal No. 642 of 2012 - FINAL ORDER NO. 41778 / 2021 - Dated:- 25-8-2021 - MS. SULEKHA BEEVI C.S., MEMBER (JUDICIAL) AND MR. P. VENKATA SUBBA RAO, MEMBER (TE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e process of law, the Original Authority vide order impugned herein confirmed the demand of Service Tax along with interest and imposed penalty. Aggrieved by such order, the appellant is now before the Tribunal. 3.1.1 Learned Counsel Ms. K. Nancy appeared and argued on behalf of the appellant. She submitted that the in the present appeal, the appellant is contesting only the demand confirmed under the category of Cargo Handling Services . That such services were provided by the appellant as a sub-contractor to M/s. ACL; the appellant had provided transportation services relating to the cargo of the customers of M/s. ACL. For the services rendered by the appellant, M/s. ACL has included the cost along with applicable Service Tax and recovered the entire amount from their clients and have discharged Service Tax liability. That since the entire Service Tax on the consideration received from their clients has been already discharged by M/s. ACL, the appellant, being a sub-contractor, is not liable to pay Service Tax. As there was only one service provided, there cannot be demand for payment of tax again. 3.1.2 She furnished the document issued by M/s. ACL to support the above co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -contractor to pay Service Tax when main contractor has paid on the full value of consideration. 3.2.3 The Learned Counsel adverted to the Show Cause Notice and submitted that apart from merely stating that extended period is invokable, no reasons have been put forward in the Show Cause Notice. 4.1 Learned Authorized Representative Shri Arul C. Durairaj appeared on behalf of the Department and supported the findings in the impugned order. Learned Authorized Representative vehemently argued that even if the main contractor has discharged Service Tax on Cargo Handling Services, the appellant, being the sub-contractor, is liable to pay Service tax because the appellant is providing services to M/s. ACL, the main contractor. That the consideration received by the appellant from the main contractor is the consideration received for the services provided to the main contractor and therefore, is subject to levy of Service Tax; the correct method would be that the appellant discharges Service Tax on the consideration received from M/s. ACL and the same can be claimed as input tax credit by M/s. ACL. 4.2 With regard to limitation, Learned Authorized Representative supported the fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any exemption granted, a sub-contractor has to discharge the tax liability. The service recipient i.e. the main contractor can, however, avail the benefit of the provisions of the Cenvat Rules. When such a mechanism has been provided under the Act and the Rules framed thereunder, there is no reason as to why a sub-contractor should not pay Service Tax merely because the main contractor has discharged the tax liability. As noticed above, there can be no possibility of double taxation because the Cenvat Rules allow a provider of output service to take credit of the Service Tax paid at the preceding stage. . . . . 30 . Thus, for all the reasons stated above, it is not possible to accept the contention of the Learned Counsel for the Respondent that a sub-contractor is not required to discharge Service Tax liability if the main contractor has discharged liability on the work assigned to the sub-contractor. All decisions, including those referred to in this order, taking a contrary view stand overruled. 31 . The reference is, accordingly, answered in the following terms : A sub-contractor would be liable to pay Service Tax even if the main contrac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here is a clear possibility for a bona fide belief that as the whole amount has been subjected to service tax the amount received by the appellant may not be liable to service tax in connection with the services rendered by them. The issue involved has been a subject matter of interpretation by the Tribunal and High Courts. In fact the earlier Circular issued by the Board, covering the period prior to the introduction of Cenvat Credit Rules gave an impression that when the main service provider discharged the service tax on gross value there may not be tax liability on the sub-contractor rendering similar service to the main contractor. The Tribunal in various cases held in such a case involving interpretation of law and also a bona fide belief regarding service tax liability, will not attract the demand for extended period. We also take note that service tax liability on the appellant when discharged will be available as a credit to RSIC which can be used by RSIC for discharging their overall service tax liability. As such, to impute motivation to the appellant for intention to evade payment of duty is not sustainable. A reference can be made to the Tribunal s decisions in British ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r allegation that the appellants have wilfully suppressed facts with the intention to evade payment of Service Tax. In the present case, the main contractor / M/s. ACL collected the full consideration including Service Tax from the clients, which is clear from the records. Appellants from the very beginning have raised the contention that they were instructed by M/s. ACL that they are not required to pay the Service Tax. We cannot find any factual basis for invoking the extended period. 9.3 We therefore hold that the demand raised by invoking the extended period cannot be sustained and requires to be set aside, which we hereby do. 10. From the discussions, we hold that the appeal fails on merits. However, we hold that the demand for the extended period of limitation, if any, cannot sustain and the impugned order to this extent is set aside, without disturbing any demand that falls within the normal period. For the same reasons, we find that the penalties cannot sustain. We set aside the same. The appellant succeeds on the ground of limitation only. 11. The appeal is disposed of on above terms. (Order pronounced in the open court on 25.08.2021) - - TaxTMI - TMITax - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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