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2014 (10) TMI 524 - AT - Service TaxWhether the sub-contractor of a main contractor is liable to discharge the service tax liability on the services provided by him - Applicability of old circulars - Denial of the benefit of exemption under Notification No. 12/2003-ST - Abatement of 67% under notification No.1/2006-ST - Penalties under sections 76, 77 and 78 - Held that:- Service tax law has been extended to a large number of services from 2002 onwards and scheme of Cenvat Credit was extended to services, no such circular has been issued in respect of any of the services which became taxable in 2002 or afterwards. Even in respect of services which were taxable before 2002, the earlier circulars became redundant in view of the change in law. Appellant had no doubt about the provisions of law and the fact that his activity was chargeable to service tax. This is evident from the fact that the appellant was paying service tax before 1.3.2006. From 1.3.2006 the reason for stopping to make payment is only that the main contractor was specifically made ineligible to take credit of input services vide notification no. 1/2006. In my opinion if law specifically prohibits doing something, the same cannot be circumvented by stopping to pay duty and claiming benefit of circulars which were not issued even in respect of that service and was also prior to the law at the relevant time i.e. introduction of Cenvat credit scheme to services. Appellant had no doubt about the taxability of service and was in fact paying service tax till 28.2.2006 and stopped paying service tax w.e.f. 1.3.2006 due to changes in legal position relating to the main contractor, it is clearly a case of taking law into hands. The notification No. 1/2006 clearly prohibits taking the credit of service tax paid on input services for availing the abatement. By not paying the duty appellant is trying to subvert purpose of restriction imposed in the new notification. Clearly this is a willful act with clear intention to evade payment of duty. The appellant is liable to pay service tax on the taxable services rendered by him in the capacity of a sub-contractor. The appellant's eligibility to the benefits of Notification No. 12/2003-ST and 1/2006-ST shall be examined by the adjudicating authority in the light of the evidences already available on record or on the basis of documentary evidence which the appellant shall submit forthwith to the adjudicating authority. The service tax demands shall be re-computed thereafter in accordance with law. Extended period of time is invokable in the present case as the appellant has suppressed facts and consequently, the appellant is also liable to penalties under sections 76, 77 & 78 of the Finance Act, 1994 - Decided against assessee.
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