TMI Blog2009 (8) TMI 174X X X X Extracts X X X X X X X X Extracts X X X X ..... tax paid thereon, benefit of exemption under notification 12/2003-S.T. is admissible – In respect of tax liability on the “commercial or industrial construction service” rendered as sub-contractor, Circular dated 23-8-2007 stting sub-contractors as liable to pay service tax “oppressive” and hence, having prospective effect only - the assessee should not be asked to pay service tax if main contractor has paid the tax - however, their claim for abatement under Notification 1/2006 ST dated 1-3-2006 should be considered if appellant held liable to pay tax - - ST/83/2008 - A/262/2009-WZB/C-II/CSTB - Dated:- 28-8-2009 - S/Shri P.G. Chacko, Member (J) and A.K. Srivastava, Member (T) S/Shri G. Natarajan, Advocate with Amit S. Agarwal, C.A. , for the Appellant. Shri S.S. Katiyar, SDR, for the Respondent. [Order per : P.C. Chacko, Member (J)]. - In this appeal filed by the assessee, the challenge is mainly against demand of Rs. 63,28,217/- comprising service tax of Rs. 62,04,135/- and education cess of Rs. 1,24,082/- confirmed against them by the Commissioner in adjudication of a show-cause notice dated 23-3-2007 for the period 10-9-2004 to 31-12-2006. Penalties impose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the service rendered by the assessee to M/s. Punj Lloyd Ltd. under the sub-contract, it was contended that there was no liability to pay such tax inasmuch as the main contractor M/s. Punj Lloyd Ltd.) was paying service tax in respect of the same service rendered to M/s. Jindal Power Ltd. In this connection, the assessee relied on a few circulars issued by CBEC. Against a part of the demand of service tax, the plea of limitation was also raised. But the ld. Commissioner did not accept these arguments. Hence the impugned order. 2. The ld. counsel for the appellant has reiterated the aforesaid contentions of the assessee and has also elaborated some of the points. He submitted that it was never the intention of the Government to levy service tax on a works contract until Clause (zzzza) was inserted under Section 65(105) of the Act (with effect from 1-6-2007). In this bid to buttress this point, the ld. counsel referred to the Finance Minister's budget speech. Para 154 of the budget speech (2007) was quoted emphatically, and the same reads thus: 154. State Governments levy a tax on the transfer of property in goods involved in the execution of a works contract. The va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s were taxable services during the respective periods. Therefore, according to the ld. SDR, the assessee was liable to pay service tax under the head construction service for the period 10-9-2004 to 15-6-2005 arid under the head commercial or industrial construction service for the period from 16-6-2005 to 31-12-2006. It is argued that this liability was not in any way affected by the introduction of works contract as a new taxable service. In this context, it is also submitted that the case law cited by the ld. counsel is not applicable inasmuch as, in those cases, the parties had contested the Revenue's claim that the activities undertaken by them were covered by the definition of one or the other taxable service which existed prior to the introduction of the new taxable service. With regard to the transactions between the assessee and M/s. Punj Lloyd Ltd., the ld. SDR has opposed the claim that the former as a sub-contractor was not liable to pay service tax. It is submitted that there was neither any provision of law nor any circular of the Board which made the assessee entitled to claim such immunity. In his rejoinder, the ld. counsel points out that the Board for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice tax, his sub-contractor was not liable to pay such tax, were superseded with effect from 23-8-2007 only and therefore the assessee is entitled to the benefit of the previous circulars for the period of dispute. Contextually, it is pointed out that the new circular dated 23-8-2007, being an oppressive circular insofar as the subcontractors are concerned, should not be given retrospective effect as held by the Apex Court in Suchitra Components Ltd. v. CCE -2008 (11) S.T.R. 430 (S.C.) = 2007 (208) E.L.T. 321 (S.C.). The ld. counsel has however hastened to add that the earlier payments made by the assessee towards service tax under other headings shall not preclude them from challenging the tax liability. The ld. counsel thus rules out the applicability of the doctrine of estoppel. It is pointed out that there is no estoppel in taxation matters as held by the Hon'ble Supreme Court in Dunlop India Ltd. Madras Rubber Factory Ltd. v. UOI others - 1983 (13) E.L.T. 1566 (S.C.) and in several other cases. The ld. SDR is of the view that the Board's Circular dated 23-8-2007 cannot override the mandatory provisions of law as this circular itself says. It is submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thin the ambit of construction service upto 15-6-2005 and commercial or industrial construction services thereafter upto 31-3-2006. The assessee has never disputed this fact. We are not impressed with their present attempt to escape tax liability for the period upto 31-3-2006 on the strength of a doctrine which was introduced on 1-6-2007 with prospective effect. In this view of the matter, we find that the decisions cited by the ld. counsel are of no aid to the appellant. 6. For instance, in the case of Soma Enterprise (supra), the party had provided a taxable service to NTPC during a period prior to 1-6-2007. The department sought to levy service tax under the head commercial or industrial construction service which was resisted by the assessee who maintained that theirs was a works contract which was not taxable prior to 1-6-2007. It is clear from the text of the judgment that the assessee never admitted that the activity undertaken by them was covered by commercial or industrial construction service. In this factual situation, the Tribunal proceeded to decide on the issue. Such a decision may not be applicable to the present case inasmuch as, in this cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds. We are unable to accept this argument. It is true that several materials were used in the execution of work, but these materials were actually sold by the service-provider to the service recipient as evidenced by the relevant invoices wherein the cost of materials was separately shown. The Revenue has no case that on the sale value, the appellant did not pay sale tax. On their part, the appellant has asserted that they paid sale tax on the cost of materials used in the execution of works. If that be so, nothing stands in the way of granting the benefit of the Notification to the assessee. We have examined some of the relevant invoices and we find that the appellant separately collected the value of the materials used in the execution of the work, from the service-recipient. They also paid sale tax, which fact has not been disputed by the Revenue. In any case, in the impugned order, there is no rebuttal of the assessee's claim of having paid sale tax. In the circumstances, the assessee has to be given the benefit of Notification 12/2003-ST. We are told that, if this benefit is given, there would be no surviving demand in respect of the service rendered by the assessee to NT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervice tax on the same service for the same period. We are of the view that, for this purpose, the assessee should be given an opportunity. 9. Accordingly, the demand of service tax and the associated penalties in relation to the service rendered by the appellant as sub-contractor to M/s. Punj Lloyd Ltd (main contractor) during the period 1-3-2006 to 31-12-2006 are set aside and the case is remanded to the adjudication authority for fresh adjudication in accordance with law after giving the assessee a reasonable opportunity of adducing evidence and of being personally heard. If it is found that the main contractor paid service tax on the same service for the same period, there would be no tax liability for the assessee (sub-contractor). On the other hand, if the assessee fails to prove payment of service tax by the main contractor, the former would be liable to pay service tax on the service for the period of dispute in accordance with law. In this event, however, their claim for abatement under Notification 1/2006 ST dated 1-3-2006 should be considered. It goes without saying that the assessee should be given a reasonable opportunity of being heard on this aspect also. 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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