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TMI Blog2023 (7) TMI 917X X X X Extracts X X X X X X X X Extracts X X X X ..... T. LTD, VERSUS THE VICE CHAIRMAN SETTLEMENT COMMISSION, CHENNAI, THE PRINCIPAL COMMISIONER OF GST AND CENTRAL EXCISE, BANGALORE [ 2021 (10) TMI 233 - KARNATAKA HIGH COURT ] emphasises that where the government received the entire amount of tax an assessee cannot be called upon to make payment even if it had deposited some portion of the tax dues and the remaining portion was deposited by the service provider. The Karnataka High Court also observed that once the tax liability has been discharged, regardless of the person who has discharged, an assessee cannot be asked to pay the tax again. In this view of the matter, when the entire tax due has been deposited in the account of the Central Government though not entirely by the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mises of the appellant and the residential premises of the two directors of the appellant were searched by the Central Excise officers on 27.02.2014 and after investigation, a show cause notice dated 15.10.2015 alleging short payment of service tax, was issued demanding service tax amounting to Rs. 5,20,16,634/- along with interest. Penalties on the appellant and its directors were also proposed. The show cause notice alleged that though the appellant was required to pay service tax on the taxable amount received from the clients on account of manpower recruitment or supply agency service provided by them to their clients, and the reverse charge mechanism introduced by notification dated 20.06.2012 would not be applicable to the appellant s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i is a private limited concern and therefore notification 30/2012-ST dated 20.06.2012 will not apply to the party and as provided in Rule-2(d)(ii) of the Rules, the person liable to pay the tax‟ would be the provider of the services i.e. M/s. Aadarsh Sri Sai. Thus, I find that even during the period 01.07.2012 onwards, only the party was required to discharge the entire service tax liability. xxxxxxxxxxx 60. In view of the aforesaid discussion, I hold that it was the legal responsibility of the party to discharge the complete service tax liability on the manpower supply services rendered by them during the period 2011-12 to 2013-14. As already observed by me the total differential service tax required to be paid by the party ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice tax in contravention of the provisions of the Act, as observed in the preceding paras. Accordingly, I hold that they are liable for penalty under Section 78A of the Act. (emphasis supplied) 6. Shri R M Saxena, learned counsel appearing for the appellant submitted that the concept of reverse charge mechanism under notification dated 20.06.2012 to manpower supply would not be applicable to a private limited company, but as this provision was new, there was lot of confusion in the trade and the clients of the appellant, who were body corporates and were receiving manpower supply service from the other service providers also who were proprietary/partnership firms in which case they would be paying 75% of the total tax leviable, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2022 (58) G.S.T.L. 151 (Kar.)] and the relevant observations are as follows: 4. Having heard the Learned Counsel for the parties and having perused the Petition Papers, this Court is inclined to grant a limited indulgence in the matter as under and for the following reasons: (a) xxxxxxxxx (b) There is also some force in the contention of the assessee that the entire amount due by way of tax having already reached the Exchequer, the assessee could not have been called to make the payment once over; petitioners had availed manpower services and in terms of Section 68(2) of the Finance Act, 1994, 50% of the tax due was paid by the assessee and the remaining 50% was remitted by the service provider; however, w.e.f. 20-6-2012 vide Not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -Bang.) ] and Commissioner of Service Tax, Meerut-II vs. Geeta Industries P. Ltd. [2011 (22) S.T.R. 293 (Tri.-Del.) ] made the same observations. 12. In this view of the matter, when the entire tax due has been deposited in the account of the Central Government though not entirely by the appellant as a service provider but also by the service recipients, it will not be possible to sustain the demand. 13. The penalties could also not, for this reason, be imposed upon the directors of the appellant. 14. The impugned order dated 08.12.2016 passed by the Commissioner is, set aside. Service Tax Appeal No. 50610 of 2017, Service Tax Appeal No. 50612 of 2017 and Service Tax Appeal No. 51454 of 2017 are, accordingly, allowed. (Orde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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