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TMI Blog2024 (7) TMI 480X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 26(1)(e) of SEZ Act with Rule 31 of SEZ Rules would show that the only condition required for availing exemption from payment of service tax by developer/entrepreneur/ unit is that the taxable services should be used for carrying on the authorized operations by the Developer/Entrepreneurs/Unit. The location of the service provider or the place of service is entirely irrelevant for this exemption. The issue involved in the present case is in respect of the liability of the subcontractor to pay service tax. The issue as such was highly debatable and clearly an issue involving interpretation of complex provisions of law. It is also not in dispute that the issue in respect to liability of subcontractors to pay service tax has been decided by the larger bench of tribunal in case of COMMISSIONER OF SERVICE TAX VERSUS MELANGE DEVELOPERS PVT. LTD. [ 2019 (6) TMI 518 - CESTAT NEW DELHI-LB] . Larger Bench has in the said case observed 'A sub-contractor would be liable to pay Service Tax even if the main contractor has discharged Service Tax liability on the activity undertaken by the sub-contractor in pursuance of the contract.' Extended period of limitation - HELD THAT:- An exte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Appellant submits that the Appellant is directly providing the services to SEZ units and is not a sub-contractor and hence the Appellant is entitled to the benefit of exemption. It is his submission that the conditions prescribed under various Notifications cannot override the exemption provided in the SEZ Act. 6. He further submitted that the Appellant is providing the services to ONGC and RIL located in SEZ area and the said understanding of the Ld. Adjudicating Authority that the Appellant is providing the services to L T is fallacious. M/s L T is only acting as an intermediary between the Appellant and the SEZ unit where the orders are placed upon the Appellant through M/s L T, however, the services are provided directly to the SEZ unit and the invoices are also raised directly upon the said SEZ units. The said fact is substantiated upon perusal of the Work Orders (at page 120 as annexure-11 in the appeal paperbook) executed between the Appellant and M/s L T wherein it has been categorically provided that all billings shall be done by the Appellant directly upon the SEZ units and all the payments to the Appellant were to be made directly by the said SEZ units only. The Work ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it was submitted that the conditions prescribed vide the Notifications mentioned hereinabove will have no bearing on the exemption available to the Appellant under the SEZ Act as the said Act will have an overriding effect over every other Notification/ law made in this regard by virtue of Section 51. It is submitted that when a benefit has been provided by means of a substantive law which is accompanied with an overriding clause, then the scope of the said provision cannot be restricted by means of Notification or any other delegated legislation whatsoever. In this regard, reliance is placed on the decisions referred in the compilation of cases, wherein it has been categorically held that exemption provided vide the SEZ Act shall be available irrespective of the existence of anything contained to the contrary in any other law. 10. In view of the submissions made hereinabove, he submitted that in terms of the SEZ Act the Appellant shall be eligible to avail the benefits of exemption from payment of service tax on the services rendered by it. During the period in question, the Appellant has not received any payment towards the service tax as no such allegation has been made in ter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Finance Act would be inconsistent with the provisions of the SEZ Act. It also needs to be noted that the SEZ Act was enacted in 2005, much after the enactment of the Finance Act in 1994. The Notification has been issued only to operationalize the exemption/immunity available to SEZ units under Section 26(1)(e) of the SEZ Act, 2005. Service tax is exempted by Section 26 of SEZ Act, 2005. Thus, exemption Notification itself not necessary. Hence, the Appellant has rightly availed the exemption. 16. The conjoint reading of Section 26(1)(e) of SEZ Act with Rule 31 of SEZ Rules would show that the only condition required for availing exemption from payment of service tax by developer/entrepreneur/ unit is that the taxable services should be used for carrying on the authorized operations by the Developer/Entrepreneurs/Unit. The location of the service provider or the place of service is entirely irrelevant for this exemption. 17. We also find that the provisions of an Act which provide for an exemption from a tax have to be interpreted strictly. It is well settled legal principle that in a taxing statute, the provision has to be read in it s as is form. There is no room for any intendment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid at the preceding stage. .. 22. The decisions of the Tribunal holding that double taxation will not result if a sub-contractor discharges the tax liability because of the CENVAT Rules, now need to be referred to. .. 26. At this stage, it would also be useful to refer to a larger Bench decision of the Tribunal in Vijay Sharma Company vs CCE, Chandigarh, reported in 2010 (20) STR 309 (Tri.-LB). The issue that arose before the larger Bench was as to whether service provided by a sub-broker are covered under the ambit of Service Tax and taxable or not. After noticing that a subcontractor is liable to pay Service Tax, the larger Bench examined as to whether this would result in double taxation if the main contractor has also paid Service Tax and observed that if service tax is paid by a sub-broker in respect of same taxable service provided by the stock broker, the stock broker is entitled to the credit of the tax so paid in view of the provisions of the CENVAT Credit Rules. The relevant paragraph 9 is reproduced below : 9. It is true that there is no provision under Finance Act, 1994 for double taxation. The scheme of service tax law suggest that it is a single point tax law withou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l 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 contractor has discharged Service Tax liability on the activity undertaken by the sub-contractor in pursuance of the contract. 20. Thus in view of the above decision of the larger bench the issue in respect of leviability of service tax on the sub contractor is decided holding that the sub contractor is required to be accessed to service tax independently. However in the present case the demand for short/ not paid service tax by the sub contractor during the period upto 31st March 2010 has been made vide Show cause notice dated 2012, by invoking extended period of limitation as per proviso to Section 73 (1) of the Finance Act, 1994. For invoking the extended period of limitation. Impugned order observes as follows: 4.18. I find that the party vide their letter dt. nil , received on 26.11.2010, and letter dated 04.04.2011 has accepted to render taxable services 'i.e. 'Technical consultancy and 'Supply Of Manpower' since November 2006. Rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turns that no amount has been received in money, against the services provided by them. As regards invocation of extended period of limitation, since the party has not obtained registration, has not paid Service Tax due and has not filed ST-3 returns truthfully and correctly with intent to evade payment of Service Tax in contravention of the various provisions of the said ACT and rules made thereunder larger period of demand is legally tenable. Reliance is placed on a recent judgement of Hon'ble CESTAT in the case of Rajasthan State Beverage Corporation Limited 2013 (TIOL) 1110-CESTAT(Delhi) wherein it was held that:- Despite the clear obligation enjoined by unambiguous provisions of the Act, the appellant neither obtained registration as a taxable service provider; nor filed periodical returns nor remitted service tax as mandated by the provisions of the Act. The tax evasion by the appellant came to notice of Revenue only when Intelligence Officers of the Anti Evasion Wing came upon information of the activities of the appellant. . The requisite information was provided by the appellant to Revenue in bits and pieces In these totality of circumstances, the conclusion by revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arious case laws to reiterate their views. We find that the appellant is having a strong ground regarding the question of time- bar. It is to be noted that all invoices, for full consideration, have been raised by RSIC and the amount collected from the clients [importers and exports] were subjected to service tax which was deposited to the Government. RSIC in turn are paying certain amount to the appellants to get the services in these ICDs. In such situation, there 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after held that extended period of limitation cannot be invoked to demand service tax in such cases. 12. In this regard, it is relevant to reproduce the said findings of the Tribunal in para 5.2 as under: On limitation also we agree with the argument of Ld, Counsel. We find that during the relevant period there were various Circulars and trade notices by the Commissionerate clarifying that where the principle service provider discharged his service tax liability on the entire value of the services, a separate liability cannot be imposed against the sub-contractor. The said Circulars stands taken note of by the Tribunal in various judgments and its stand held that where the entire service tax has been paid on the full consideration of the services, the sub-contractors' liability would not arise to pay service tax again on the part of principle service. One such reference can be made by following circulars: ● TRU letter F. No. 341/18/2004-TRU (Pt.) dated 17-12-2004 ● Circular No. 23/3/97-5.T., dated 13-10-1997 ● Master Circular No. 96/7/2007-ST dated 23-8-2007 In fact, also from various following decisions of the Tribunal:- ● Urvi Construction v. CST, Ahme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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