TMI Blog2014 (3) TMI 302X X X X Extracts X X X X X X X X Extracts X X X X ..... t of Kerala in the case of Krishna Poduval [2005 (10) TMI 279 - Kerala High Court], and of the Hon'ble Apex Court in the case of Chairman SEBI Vs. Shriram Mutual Fund & Another [2006 (5) TMI 191 - SUPREME COURT OF INDIA] and Rajasthan Spinning & Weaving Mills [2009 (5) TMI 15 - SUPREME COURT OF INDIA]. OR The appellant is not liable to penalty under Section 76 & 78 of the Finance Act, inasmuch as the appellant had paid the tax with interest before issue of show-cause notice as held by the Ld. Member (Judicial). - ST/422 & 423/2012 - - - Dated:- 12-11-2013 - P R Chandrasekharan And Anil Choudhary, JJ. For the Appellant : Shri S. Jaikumar, Advocate For the Respondent : Shri Rakesh Goyal, Addl. Commissioner (AR) PER : P.R. Chandrasekharan There are two appeals filed against Order-in-Original No. 14-15/ST/2012/C dated 28/03/2012 passed by the Commissioner of Central Excise, Nagpur. 2. The appellant in these appeals is M/s Sunil Hi-tech Engineers Ltd., Nagpur. Appeal No. ST/422/2012 involves two issues, namely: (a) Inclusion of value of materials sold on payment of VAT in the taxable value of services rendered to M/s National Thermal Power Corporation by d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is documentary proof indicating the value of the said goods and materials and the appellant has not furnished any documentary evidence in support of their claim for abatement of value of materials sold. Therefore, he has denied the benefit of exemption under Notification 12/2003. As regards the second issue, he has held that sub-contractor is independently liable to pay service tax on the services rendered by him irrespective of whether the main contractor is discharging service tax liability or not relying on the Circular dated 23/08/2007 issued by the Board in this regard. As regards invocation of larger period of time, the adjudicating has held that the appellant has suppressed and mis-stated the facts resulting in evasion of service tax and therefore, extended period of time is invokable. Accordingly he has confirmed a demand of Rs. 63,28,217/- in respect of the contracts pertaining to NTPC and Punj Lloyd along with interest there on and also imposing penalties under sections 76, 77 and 78 of the Finance Act, 1994. Further he has confirmed the demand of Rs. 3,05,45,211/- in respect of contracts executed for other parties along with interest and imposing penalties under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arified that every service provider, whether be a sub-contractor or contractor, should discharge service tax liability on the services provided by him. This circular can have only prospective effect and therefore cannot be applied retrospectively. 5.3. Back-to-back subcontracting is a prevalent trade practice, particularly in construction services. In such a back-to-back sub-contract, the bar cast under Notification No. 1/2006-ST for the availment of CENVAT credit on the input services would lead to double taxation. 5.4. Notwithstanding the above, the adjudicating authority has not granted the benefit of abatement of 67% under Notification No. 1/2006-ST and the appellant has also not claimed the benefit of CENVAT credit on inputs, capital goods or input services and hence they are eligible for the benefit of abatement. 5.5. Invocation of larger period is not invokable as the issues involved are highly interpretative in nature and therefore, there is no reason for the imposition of various penalties imposed on the appellants. Accordingly it is prayed that the appeals be allowed. 6. The ld. Addl. Commissioner (AR) appearing for the Revenue made the following submissions:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r suppression with an intention to evade payment of service tax. Consequently, imposition of penalties are also justified. Accordingly it is prayed that the impugned order be sustained. 7. We have carefully considered the submissions made by both the sides. 7.1. There are three issues which need consideration in these appeals, namely:- (a) whether the appellant is eligible for the benefit of notification No. 12/2003-ST which provides for exclusion of cost of materials sold from the taxable value of the services rendered? (b) whether sub-contractor is exempt from payment of service tax when the main contractor has discharged the service tax liability on the value inclusive of the value of services rendered by the sub-contractor? (c) whether extended period of time could have been invoked for confirmation of service tax demand and whether the imposition of penalties is justified? 7.2. As regards the first issue, that is, eligibility to benefit of Notification No. 12/03-ST, the claim of the appellant has been rejected only on the ground that the appellant did not submit documentary evidence in support of their claim for sale of goods during the rendering of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in this regard. Accordingly, we reject this contention raised by the appellant in toto. 7.4. The contention of the appellant that vide circulars dated 6/6/97, 2/7/97, 11/7/97 and 7/10/98, the Board had clarified that if the main service provider is discharging the service tax liability, the subsidiary service provider need not pay service tax and therefore, the demand of service tax from the appellant is not sustainable in law, the arguments is not convincing or acceptable for the following reasons. These circulars dealt with individual taxable services, namely, CHA services, Rent-a-cab operators services, consulting engineer's services and interior decorator/ architect's services and were specific to those services. No general proposition has been laid or clarification issued that if the main service provider pays the service tax, the subsidiary service provider need not pay service tax. In respect of commercial or industrial construction service which the appellant herein was involved, no such clarification had been issued. Further, these clarifications were issued when there was no CENVAT credit scheme providing for tax credit of the input services was in force. However, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the hon'ble Apex Court in the case of Ambica Quarry Works v. State of Gujarat others 1987 (1) SCC 213 - "The ratio of any decision must be understood in the background of the facts of that case. It has been said long time ago that a case is only an authority for what it actually decides, and not what logically follows from it". In Bhavnagar University v. Palitana Sugar Mills Pvt. Ltd - 2003(2) SCC 111, the hon'ble Apex Court observed that- "It is well settled that a little difference in facts or additional facts may make a lot of difference in the precedential value of a decision ". In Bharat Petroleum Corporation Ltd. another v. NR. Vairamani another - AIR 2004 SC 4778, it was held that a decision cannot be relied on without disclosing the factual situation. In the same judgment this Court held as under: "Courts should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. Observations of courts are neither to be read as Euclid's theorems nor as provisions of the statute and that too taken out of their context. These observations must be read in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12/2010 vide reply dated 19th September, 2011, in para 4.1, the appellant has stated as follows:- "4.1 But, with effect from 1-3-2006, the said notification 15/2004 has been replaced by Notification 1/2006, which also prohibited availment of Cenvat credit on input services. Hence with effect from 1.03.2006, we have stopped paying service tax and sought the benefit of various circulars and judicial pronouncements to the effect that no service tax is payable by the sub-contractors, if the main contractor pays service tax." This averment of the appellant clearly shows that the reason for non-payment of service tax was not because of any bona fide belief but because notification 1/2006-ST which provided for abatement in value of taxable service stipulated a condition that no CENVAT credit of excise duty paid on inputs and capital goods and service tax paid on input services shall be availed. Since the main contractor was prohibited from availing input service tax credit, the appellant stopped paying service tax on input services. Under the previous notification 15/2004-ST, the restriction on non-availment of credit applied only on inputs and capital goods and not on input servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see. Hence, by no stretch of imagination the concept of knowledge can be read into the provisions because that would tantamount to rendering the defined term relevant date nugatory and such an interpretation is not permissible. 19. The language employed in the proviso to sub-section (1) of section 11A, is clear and unambiguous and makes it abundantly clear that moment there is non-levy or short levy etc. of central excise duty with intention to evade payment of duty for any of the reasons specified thereunder, the proviso would come into operation and the period of limitation would stand extended from one year to five years. This is the only requirement of the provision. Once it is found that the ingredients of the proviso are satisfied, all that has to be seen as to what is the relevant date and as to whether the show cause notice has been served within a period of five years therefrom." Section 73 of the Finance Act, 1994 is pari materia to Section 11A of the Central Excise Act and therefore, the ratio of the above decision applies squarely to the facts of the present case. Thus we are of the considered view that extended period of time has been correctly invoked to demand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 78. 8. To sum up, the appellant is liable to pay service tax on the taxable services rendered by him in the capacity of a sub-contractor. The appellant's eligibility to the benefits of Notification No.12/2003-ST and 1/2006-ST shall be examined by the adjudicating authority in the light of the evidences already available on record or on the basis of documentary evidence which the appellant shall submit forthwith to the adjudicating authority. The service tax demands shall be re-computed thereafter in accordance with law. Extended period of time is invokable in the present case as the appellant has suppressed facts and consequently, the appellant is also liable to penalties under sections 76, 77 78 of the Finance Act, 1994, as discussed in para 7.8 above. The quantum of penalties will have to be re-determined after re-computing the service tax demand. Thus the matter is remanded back to the adjudicating authority for denovo consideration as discussed above. (Operative part of the order pronounced in Court on _/08/2013) 9. I agree with the finding on 1st issue (a), as recorded by Ld. brother Member (Technical). I further add that the work done/executed is essentially in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is held that no case of alleged violation is made out as provided in the Sections 76 78 of the Finance Act. Hence the penalty imposed under Section 76 78 is set aside. Penalty under Section 77 is confirmed. 13. Thus the appeal is allowed in part by way of remand for re-determination of tax-liability as indicated above. DIFFERENCE OF OPINION 14. In view of the difference of opinion between the two members, the following points of difference are placed before the Hon'ble President for reference to the 3rd Member: (1) Whether the sub-contractor of a main contractor is liable to discharge the service tax liability on the services provided by him as held by the Ld. Member (Technical) relying on the decision of the Larger Bench of this Tribunal in the case of Vijay Sharma Co. [2010 (20) STR 309 (Tri-LB)] and the decision of this Tribunal in the case of Sew Construction Ltd. [2011 (22) STR 666 (Tri.-Del.)] OR The appellant being a sub-contractor is not liable to pay service tax prior to 23/08/2007 in view of the clarification issued by the Revenue vide Master Circular No. 96/7/2007 dated 23/08/2007 (2) Whether the appellant is liable to penalty under the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X
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