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2023 (9) TMI 295 - CESTAT KOLKATANon-payment of service tax - Erection, Commissioning and Installation Services - rendering of services as a consortium partner - rendering of services as a sub-contractor to the main contractors - penalty - HELD THAT:- The appellant has rendered two types of services. In the first category, they have rendered services as a consortium partner, along with the Lead Partner, M/s Rajshekhar Constructions, to BHEL. In the second category, they rendered services as a sub-contractor to the main contractors namely M/s L&T, S&L Kolkata, TATA Project West Bengal - It is observed that the impugned order considered the Appellant as sub-contractor on both these categories and confirmed service tax by citing the Master Circular No. 96/7/2007 ST dated: 23.08.2007, issued by Board - it is observed that there is a distinction in both the above categories, which has not been considered in the impugned order. In case of services rendered to BHEL, the Appellant was a consortium partner - HELD THAT:- From the arrangement, it is evident that the Lead Partner has collected and paid service tax on the full value received for the services rendered to BHEL. The Appellant has rendered their respective share of the work order to BHEL, but service tax pertains to that portion of service was also paid by the Lead Partner, as they have raised the bills on the total value with BHEL - In view of the above, the Appellant were not subcontractors in this case and hence the clarification issued by the Board Vide Master Circular No. 96/7/2007 ST dated: 23.08.2007 is not applicable in this case. Accordingly, the demand confirmed in the impugned order on this count is not sustainable. In case of services rendered to main contractors namely M/s L&T, S&L Kolkata, TATA Project West Bengal - main defense is that they have not collected service tax from the main contractors and hence the demand of service tax on them is not sustainable - HELD THAT:- From clarification issued by Board by Circular No. 96/7/2007 ST dated: 23.08.2007, it is observed that a subcontractor is liable to pay service tax, even if the main contractor pays service tax on the full value, as the service tax paid by the sub-contractor will be available as input service to the main contractor. Relying on the above Circular issued by the Board, the Appellant, as sub-contractor is liable to pay service tax on the services rendered by them to the main contractor. Accordingly, the demand confirmed in the impugned order upheld on this count. Levy of penalty - HELD THAT:- The entire issue is revenue neutral. Appellant has not collected the service tax from the main contractors. Hence, there was no mensrea established on the part of the Appellant to evade payment of service tax - the Appellant has clearly justified their reasons for non-payment of service tax. Accordingly, this is a fit case for waiver of penalty under section 80 of the Finance Act, 1994, which existed during the relevant period under dispute. Accordingly, the penalty imposed in the impugned order waived off. Thus, the demand of service tax in the impugned order, on the services rendered by the Appellant as a consortium partner to BHELset aside - The demand of service tax, along with interest, as a sub-contractor to other main contractors (Other than services rendered to BHEL) in the impugned order is upheld - All the penalties imposed on the Appellant are waived as per Section 80 of the Finance Act, 1994, which existed during the relevant period under dispute - appeal allowed in part.
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