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2015 (4) TMI 705 - HC - Service TaxTransfer of burden to discharge of service tax liability to another person - extended period of limitation - bondafide belief - Sale of space or time for advertisement service to several advertising agencies - Held that:- We do not agree with the views of CESTAT that the service tax liability could not have been transferred by way of a contract. The reliance of DTC on the ruling in Rashtriya Ispat Nigam Limited (2012 (4) TMI 457 - Supreme Court of India) on this score was correct and it appears that the same has not been properly appreciated by CESTAT - The above ruling of Supreme Court in the case of Rashtriya Ispat Nigam Limited (supra), however, cannot detract from the fact that in terms of the statutory provisions it is the appellant which is to discharge the liability towards the Revenue on account of service tax. Undoubtedly, the service tax burden can be transferred by contractual arrangement to the other party. But, on account of such contractual arrangement, the assessee cannot ask the Revenue to recover the tax dues from a third party or wait for discharge of the liability by the assessee till it has recovered the amount from its contractors. - The fastening of liability on such account by such order on the contractors is, thus, a matter restricted to claims of the appellant against such parties. It would have no bearing insofar as the claim of the Revenue against the appellant for recovery of the tax dues is concerned. Extended period of limitation - Held that:- Plea of “bona fide belief” is devoid of substance. The appellant is a public sector undertaking and should have been more vigilant in compliance with its statutory obligations. It cannot take cover under the plea that contractors engaged by it having agreed to bear the burden of taxation, there was no need for any further action on its part. For purposes of the taxing statute, the appellant is an assessee, and statutorily bound to not only get itself registered but also submit the requisite returns as per the prescription of law and rules framed thereunder. - Imposition of the service tax liability under Section 73 read with Sections 68 and 95 of Finance Act, 1994 and the levy of interest thereupon in terms of Section 75 of the Finance Act, 1994 cannot be faulted. For the same reasons, the penalties imposed under Sections 76 and 77 of the Finance Act, 1994 also must be upheld. Levy of penalty u/s 78 - Held that:- It is indeed not the case of the Revenue here that service tax liability was avoided by the appellant with intent to defraud or on account of collusion or willful mis-statement or suppression of facts. In the given facts and circumstances and in light of explanations offered by the appellant even in response to the show cause notices, it is clear that there was no effort to “evade” the payment of service tax - Noticeably, the appellant was raising bills on the contractors also to claim the service tax dues in terms of the contractual terms, and - there is no dispute raised in this regard - the collections made from the contractors on account of service tax chargeable were deposited in the government account from time to time. The insistence of the appellant that it would deposit the service tax with the government only when the contractors discharged their liability on this account may not have been a proper stand. But, from this, it cannot be deduced that the effort was to evade tax liability - Thus, the inhibition under Section 80 of the Finance Act, 1994 was attracted and penalty under Section 80 could not have been imposed - Decided partly in favour of assessee.
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