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TMI Blog2025 (3) TMI 267X X X X Extracts X X X X X X X X Extracts X X X X ..... 78 of the Act. Aggrieved against the confirmation of the above demands, the appellant has filed this appeal. 2. The fact of the case are that the appellant is a sub-contractor, who has undertaken the activities of construction service along with materials for refractory work of chimney, kiln, boiler etc. As the principal contractor paid service tax on entire value of the contract, the appellant was of the view that as a sub-contractor, they did not pay service tax on the same and declared such non-payment of service tax in ST-3 returns. However, the department demanded service tax on 33% of gross amount received, invoking longer period of limitation, by classifying the said service under the category of "Commercial or Industrial Construction Service". 3. The appellant submits, the contracts awarded to them are composite in nature. The appellant referred the demand of service tax made in the Notice and submitted that the department has itself extended the benefit of abatement @ 67% in terms of Notification No.1/2006-ST dated 01.03.2006 and demanded service tax on 33% of gross amount. The appellant submits that the construction services rendered by them along with materials is appr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TRIES (P) LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, CUSTOMS AND SERVICE TAX2024 (3) TMI 234 - CESTAT KOLKATA (Page 9 - 19). (4) APPEAL NO.E/76435 OF 2014, M/S. K.K. BUILDERS & ENGINEERING PVT. LTD., Commissioner of Central Excise (Appeals), Guwahati, decided by Cestat, Kolkata on 24.04.2024 -(Page 18 to 23) (5) SHANTI CONSTRUCTION CO VERSUS C.C.E. & S.T. -RAJKOT 2023 (3) TMI 14 - CESTAT AHMEDABAD - (Page 18 to 23) (6) JANTA ELECTRIC STORE VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, ROHTAK, 2025 (1) TMI 678 -CESTAT CHANDIGARH- (Page 24 to 28) (7) M/S. VISANTHI & CO. VERSUS THE COMMISSIONER OF GST & CENTRAL EXCISE, COIMBATORE, 2023 (10) TMI 1087 - CESTAT CHENNAI - (Page 29 - 33) 3.4. In view of the above, the appellant submits that the demand of service tax along with interest and penalty confirmed in the impugned order is not sustainable. 4. Regarding invocation of extended period to demand service tax, the appellant submits that the non-payment of service tax as a sub-contractor during the impugned period was well within the knowledge of the department. They have been regularly filing ST-3 retirns and declared in the ST- 3 returns that they have not paid s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t appeal is whether sub-contractors are liable to pay service tax when the main contractor has discharged service tax liability. We observe that the said issue has already been clarified by the Board vide Circular No. 96/7/2007-S.T. dated 23.08.2007 at Point No. 999.03/23-8-07. For the sake of ready reference, the relevant clarification is reproduced below : - 999.03/ 23-8- 07 A taxable service provider outsources a 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 subcontractors 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 subcontractor. 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n pursuance of the contract." XXXXY" 7.3. We find that during period under dispute, Trade Notice. No.53-C.E (service Tax) /97 dated 04.07.1997 was in existence, which clarified that the sub contractor is not liable to pay service tax when the main contractor discharges service tax on the entire value. Thus, we find that the appellant cannot be held responsible for non payment of service tax for the period under dispute. 7.4. Regarding the retrospective applicability of the Circular, we are of the view that the circular is oppressive in nature in-as-much-as it has taken a diagonally opposite view that has been taken in the Trade Notice. This circular has put the burden of discharging the liability of service tax to the sub- contractor. It has been held in the case of Commissioner of Central Excise, Bangalore Vs. Mysore Electrical Industries Ltd. reported in 2006(204) E.L.T. 517 (SC) and also in the case of Suchitra Components Ltd Vs Commissioner of C. Ex, Guntur 2008 (11) S.T.R. 430 (SC) that a beneficial circular has to be applied retrospectively while an oppressive circular has to be applied prospectively. Thus, we hold that the said Circular cannot be applied retrospectively. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax is payable by the appellant as they have rendered the services with materials. Further, for the period post June 01, 2007 also, we observe that the demand of service tax can be made only under works contract services. 3.1. In the instant case it is evident from the documents available on record that for the period prior to June 01, 2007, the appellant has been providing the services along with materials. Hence, the appellant is not liable to pay any service tax under the category of 'Commercial or Industrial Construction Services' as per the settled law for the period prior to June 01, 2007. 3.2. For the period subsequent to June 01, 2007, the works done by the appellant, whether erection or commissioning or installation services or commercial or industrial construction services or construction of complex services or completion and finishing services, are all classifiable under "Works Contract Service" under the Act as long as the conditions laid down in section 65(105)(zzzza) are satisfied. The materials on record conclusively evidence that the said conditions are satisfied in the instant case. However, as would be evident from the show cause notice as well as from the impu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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