9911796707
TMI Blog2024 (10) TMI 1345X X X X Extracts X X X X X X X X Extracts X X X X ..... take CENVAT Credit thereon. Accordingly, it is observed that after 23.08.2007, sub-contractors are liable to pay Service Tax even if the main contractor pays the Service Tax on the entire amount. There was confusion prevalent on this issue. The Board had also issued a clarification dated 14.09.1997 wherein it had been clarified that sub-contractors were not liable to pay Service Tax when the main-contractor had paid Service Tax on the entire amount as the issue involved is revenue neutral. Only after issue of the Circular dated 23.08.2007 by the Board, the doubt about the liability to Service Tax of the sub-contractor has been clarified. However, may service providers continue to adopt the old practice of non-payment of service tax treatin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Delux Engineering Concern, D-Block, Durgachak Colony, Haldia, Purba Medinipur 721 602 (hereinafter referred to as the Appellant ) have been registered with the Service Tax Department for providing taxable services under the category of Manpower Recruitment or Supply Agency Service . The Appellant has entered into an agreement on 30.06.2004 with M/s. Prism Logistics Private Limited, 33A, Jawaharlal Nehru Road, 4th Floor, Suite No. 11, Kolkata 700 071, for supply of labour for undertaking and supervising different jobs in the in-plant logistics of M/s. South Asian Petrochem Limited, Haldia. The above said activity of supply of labour falls within the taxable service category of manpower recruitment or supply agency service as defined under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the service rendered, they were under the impression that being sub-contractors, they need not pay Service Tax. 4.1 The Appellant submits that Circular No. 96/7/2007-S.T. dated 23.08.2007 was issued by the Board, which clarified that sub-contractors were also required to pay Service Tax when the main contractor has paid Service Tax on the entire value as the sub-contractor would be eligible to take CENVAT Credit. Even after issue of this Circular, they were under the bona fide belief that the sub-contractors are not liable to pay service tax, as the entire issue is revenue neutral. 4.2. The Appellant submits that they have not suppressed any information from the Department; the Show Cause Notice has been issued on the basis of scrutiny of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant has supplied labour to M/s. Prism Logistics Pvt. Ltd. as per the agreement entered into between the parties. The service of supply of labour is a taxable service under the category of manpower recruitment or supply agency service as defined under Section 65(105)(k) of the Finance Act, 1994. 7.1. We find that the Appellant has not disputed the liability to Service Tax on the said services rendered by them to the main contractor viz. M/s. Prism Logistics Pvt. Ltd. The Appellant is primarily contesting the demand on the ground of limitation stating that they have not suppressed any information from the Department and that the Department has raised the demands based on the documents submitted by them. Accordingly, they have contended that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis of scrutiny of TDS certificates received from the Income Tax Department. Prior to that, the bills, balance-sheet and contracts with the main contractor were scrutinized by the Department and no objection has been raised. Therefore, we hold that suppression of facts with intention to evade the tax has not been established in this case. For the same reason, the penalty under Section 78 of the Finance Act, 1994 is not imposable on the Appellant. 8. In view of the above, we hold that the demand of Service Tax by invoking the extended period of limitation is not sustainable. Accordingly, we set aside the impugned order and remand the matter back to the adjudicating authority for the purpose of calculating the Service Tax liability for the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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