2016 (10) TMI 833 - AT - Service Tax

Scope of service - shot hole drilling - seismic job - sub contract work - whether the activities undertaken covered under taxable service of survey and exploration of minerals? - Held that - the services rendered are liable to service tax under the scope of the above-mentioned tax entry. Sub-contractor - whether demanding service tax from them will amount to double taxation as the main contractor also is rendering similar service to ONGC? - Held that - The service tax leviable at the hands of each service provider is decided by nature of activities undertaken by them. If the same is covered by scope of the taxable entry under Finance Act, 1994 tax liability arises. The said service becomes part of final service rendered by main contractor is of no consequence to determine the tax liability of each and every service provider. If at all, the service tax paid by a sub-contractor which becomes part of service further provided by the main contractor, the scheme of credit as envisaged by the Cenvat Credit Rules, 2004 will come into play subject to fulfillment of conditions therein. It is nobody s case that the sub-contractors per-se are not liable to service tax even if they rendered taxable service. Extended period of limitation - availability or otherwise of Cenvat credit to the recipient of service by itself cannot decide the bonafideness of the appellant. Reliance placed in the decision of CCE vs. Mahindra & Mahindra 2005 2004 (9) TMI 115 - SUPREME COURT OF INDIA where it was held that There can be number of eventualities where extended period of limitation in terms of proviso to Section 11A may be available to the Department despite availability of Modvat credit to an assessee. The availability of Modvat credit to an assessee by itself is not conclusive or decisive consideration. It may be one of the relevant consideration. How much weight is to be attached thereto would depend upon the facts of each case. Appeal dismissed - decided against appellant.

Summary

Issues:
1. Service tax liability for activities related to survey and exploration of minerals.
2. Taxability of services provided by the appellant as a sub-contractor.
3. Demand for extended period based on intention to evade payment of duty.

Analysis:
1. The appeal challenged an order by the Commissioner of Service Tax regarding the non-payment of service tax by the appellant for shot hole drilling and seismic job services provided during specific years. The Original Authority confirmed the service tax demand and imposed penalties under various provisions of the Finance Act, 1994. The appellant contended that their activities did not fall under taxable services related to survey and exploration of minerals. The Tribunal referred to relevant statutory provisions and a circular clarifying the scope of taxable services, ultimately upholding the service tax liability based on a similar precedent involving a related company.

2. The appellant argued that as a sub-contractor, demanding service tax would lead to double taxation since the main contractor also provided similar services to ONGC. The Tribunal rejected this argument, emphasizing that the tax liability is determined by the nature of activities undertaken by each service provider. The Tribunal highlighted that even if a sub-contractor's service becomes part of the final service rendered by the main contractor, each entity is individually liable for service tax if their activities fall within the taxable entry. The Tribunal also addressed the concept of Revenue neutrality and the availability of Cenvat credit, citing a Supreme Court decision to support their conclusion.

3. The appellant further contended that there should be no demand for an extended period due to the absence of intent to evade duty payment. However, the Tribunal held that the availability of Cenvat credit alone does not decide the bonafideness of the appellant. Referring to a Supreme Court decision, the Tribunal emphasized that the extended period of limitation may apply despite the availability of credit, depending on the specific circumstances of each case. Consequently, the Tribunal found no reason to interfere with the impugned order, dismissing the appeal and disposing of the stay application.

This detailed analysis of the judgment provides a comprehensive overview of the issues involved and the Tribunal's reasoning behind upholding the service tax liability and dismissing the appeal.