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2023 (7) TMI 917 - AT - Service TaxDischarge of Service tax liability - manpower recruitment or supply agency service - reverse charge mechanism - whether payment of 75% tax by the recipient of service, when the service provider (the appellant) was required to deposit 100% tax but paid only 25% tax could be treated as discharge of service tax liability by the appellant? - levy of penalty - HELD THAT:- The decision of the Karnataka High Court in M/S. ZYETA INTERIORS PVT. LTD. SHRI. AMIT PRAKASH, DIRECTOR OF M/S. ZYETA INTERIORS PVT. LTD, VERSUS THE VICE CHAIRMAN SETTLEMENT COMMISSION, CHENNAI, THE PRINCIPAL COMMISIONER OF GST AND CENTRAL EXCISE, BANGALORE [2021 (10) TMI 233 - KARNATAKA HIGH COURT] emphasises that where the government received the entire amount of tax an assessee cannot be called upon to make payment even if it had deposited some portion of the tax dues and the remaining portion was deposited by the service provider. The Karnataka High Court also observed that once the tax liability has been discharged, regardless of the person who has discharged, an assessee cannot be asked to pay the tax again. In this view of the matter, when the entire tax due has been deposited in the account of the Central Government though not entirely by the appellant as a service provider but also by the service recipients, it will not be possible to sustain the demand - The penalties could also not, for this reason, be imposed upon the directors of the appellant. Appeal allowed.
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