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TMI Blog2023 (12) TMI 1305X X X X Extracts X X X X X X X X Extracts X X X X ..... e main contractor being eligible to avail Cenvat Credit there is no situation of double taxation. The Tribunal in very recent decisions as pointed by the Department has followed the decision in the case of Melange Developers Ltd. [ 2019 (6) TMI 518 - CESTAT NEW DELHI-LB] , to hold that the sub-contractor is liable to pay service tax even if the main contractor has discharged service tax on the contract value. Judicial propriety makes it binding to follow the Larger Bench decision in order to reduce conflict of decisions - the decision of Larger Bench in the case of Melange Developers Co. would apply. The view taken by brother Member (Technical) is agreed upon and it is held that the Appellant is liable to pay service tax on the value of sub-contract/work done inspite of the fact that the main contractor has discharged the service tax on the whole contract value. The reference is answered and the difference of opinion stands resolved - papers may be placed before the Division Bench for deciding the appeal. - HON BLE SULEKHA BEEVI C.S., MEMBER (JUDICIAL) Ms A.S.K. Swetha, Advocate for the Appellant. Shri V R Pavan Kumar Shri P. Amresh Authorised Representatives for the Respondent. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the property in the goods directly passes from sub-contractor to the customer, and therefore there can only be one sale which is a deemed sale. It therefore would lead to the conclusion that there is only one taxable event of sale of goods in such a transaction. The Learned Counsel argued that similarly, while providing works contract services there can be only one taxable event. 3.2 The decision rendered by Hon ble High Court of Punjab Haryana in the case of CCE ST, Panchkula Vs M/s Lone Star Engineers [2019 (3) TMI 1515 (P H)] was relied. In the said case the Hon ble High Court held that when main contractor has discharged the service tax, the sub-contractor is not further required to pay tax. This decision was not noted by the Larger Bench while rendering the decision in the case of Melange Developers Pvt Ltd., [2019 (9) TMI 518 CESTAT, New Delhi LB]. 3.3 The decision in the case of Hindustan DORR Oliver Ltd., Another Vs Union of India Others [1989 (9) TMI 355 (Patna High Court)] was relied. It is submitted that in the said case while considering the provisions of Bihar Finance Act and the Bihar Sales Tax Rules the Hon ble High Court held that if the sub-contractor had alread ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 of the judgment of the Hon ble High Court was adverted to by the Learned AR to submit that the petitioner s prayer in that Writ Petition was whether, when contracts were entrusted to various sub-contractors the State can either collect sales tax under APVAT Act from the sub-contractor or from the petitioner (main contractor) and in the event of the State deciding to collect the sales tax from the main contractor, the amount of tax, if any, collected from the concerned sub-contractor, must be given credit to main contractor while determining the tax liability. This is because the VAT law did not allow input tax credit on deemed sales. While examining such issue on the background that main contractor is not allowed credit of the VAT paid even if the sub-contractor has discharged VAT on the same, the Hon ble High Court had observed that as the transfer of title of goods passes to the customer directly there is only one event of sale taking place. 4.1 The Learned AR submitted that the position in service tax law is different. The main contractor is eligible to take credit on the service tax paid by the sub-contractor. This is clarified by the Board in its Circular No. 96/7/2007-ST da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x on the gross amount charged. Needless to say that the said decision is binding on the Co-ordinate Bench of the Tribunal. 5.1 The Learned Counsel for Appellant has strenuously argued referring to the judgment of Jurisdictional High Court in the case of Larsen Toubro Ltd., and Anr [2006 (10) TMI 377 (AP)]. In the said decision the Hon ble Jurisdictional High Court was considering the provisions of APVAT Act 2005, and Rules. The period of assessment in the said case is April 2005 to January 2006. The VAT Act did not provide for availment of input tax credit on deemed sales. Further, it is to be noted that levy of sales tax is on sale which is the transfer of the property in goods from one person to another in the course of trade or business on payment of consideration. The Hon ble High Court observed that while executing the works contract, the transfer of title of property in goods (deemed sale) can take place only once i.e.; directly to the customer. In the case of Works Contract Services under Finance Act, 1994 it is not only transfer of property in goods ( deemed sale) and moreover the taxable event is not sale of goods. The activity of rendering Works Contract Service is the ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Learned Counsel for Appellant. The said decision is rendered under the service tax law. The facts show that the Hon ble High Court upheld the decision of the Tribunal which remanded the matter to verify whether assessee has paid service tax for remaining part of the demand, and if paid, no further demand is sustainable. One of the contentions of assessee before the Tribunal was whether the payment made by main contractor on behalf of assessee should be treated as payment made by itself. Another contention was that in view of Section 97 of Finance Act, 2012, the assessee is not liable to pay service tax. During the relevant time as per Section 97 the services in respect of management, maintenance or repair of roads was granted exemption. The Tribunal had relied on the decision in the case of Vijay Sharma Co. which was later referred and considered by Larger Bench in the case of Melange Developers Co. This decision of the Tribunal was rendered before the decision of Larger Bench in Melange Developers Pvt Ltd. 5.5 In the case of Sew Infrastructure Ltd., Vs CCE C, Raipur [2015 (3) TMI 791 (Chattisgarh)] the Hon ble High Court had relied on the decision in the case of Larger Bench ..... X X X X Extracts X X X X X X X X Extracts X X X X
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