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2014 (1) TMI 457 - HC - Service TaxContractual agreement between the service provider and service receiver - who will bear the burden of service tax - partial reverse charge after 1.7.2012 - Deduction of 50% of the Service Tax - Liability of 12% leviable under Section 66B - Service Tax not separately charged or shown in the Bills raised by the contractors - Reverse Charge Mechanism - Section 68 - Held that:- one does not know, whether all the members of the petitioner Association are individual contractors, HUF or Partnership firm or are body corporates. In the absence of said material on record, the very foundation of applicability of the said Notification falls on the ground and cannot be decided in the present case. The entire dispute raised by the petitioner Association that the liability to pay Service Tax to the extent of 50% has been fixed on the service receiver, namely the Nigam, therefore, the respondent-Nigam should bear the 50% of the tax liability on its own and cannot deduct the same from the bills of the contractors depends upon the terms of contract itself, but since no material has been placed on record in this regard, therefore, this Court cannot be expected to decide such academic and hypothetical questions, which essentially depend upon the intricate terms of the contract. Prima facie, since Section 68(1) of the Act affixed the liability to pay the Service Tax on a person providing the taxable service, the liability to pay such tax would be on the contractors and the Notification No. 30/2012, dated 20-6-2012 dividing the liability to pay such Service Tax to the extent of 50% by both service providers and service receivers, which is issued under Section 68(2) of the Act, quoted above, will not absolutely absolve the petitioner contractors from their liability to bear the entire Service Tax liability - taxable event is the providing of service, which in the present case would be point of time of execution of works contract itself, which is prior to 1-7-2012. Mere payment of such Bills for work already done after 1-7-2012 would not alter the applicability of law as applicable to the petitioner contractors prior to 1-7-2012. For this reason also the action of respondent-Nigam cannot be challenged by the petitioner-Association on the basis of change of legal position after 1-7-2012. Court finds no ground to decide the academic questions raised in the writ petition even of interpretation of provisions of law and Notification, since such questions are merely academic and hypothetical questions and no proper factual foundation or relevant evidence is available on record to decide such questions, which are essentially the questions of facts based on terms of the contract. The individual contractor can very well raise these questions either before the assessing authority, who implement those provisions of Service Tax of Central Excise Department and if they have lis against the respondent-Nigam, the arbitration clause in the contract can take care of such disputes - Decided against the petitioner association.
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