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WHETHER THE SERVICE TAX LIABILITY CAN BE TRANSFERRED TO THIRD PARTY?

Service Tax - By: - Mr. M. GOVINDARAJAN - Dated:- 28-5-2015 Last Replied Date:- 29-5-2015 - The concept of service tax was introduced in the year 1994 by Chapter V of Finance Act, 1994. According to the provisions of the Act and the rules made there under every person providing taxable services to any person is liable to pay service tax at the rates specified now and then, to the credit of the Central Government. Now in certain cases the service receiver is also liable to pay service tax at the .....

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ing engaging in the manufacture of steel products and pig iron for sale in the domestic and export markets. In 1997 the appellant appointed the respondent as the handling contractor. A formal contract was entered into between both parties. Clause 9.3 of the contract provides that the contractor shall bear and pay all taxes, duties and other liabilities in connection with the discharge or obligation under this order. Later the contractor invoked the arbitration clause for raising a dispute as to .....

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n. Therefore an assessee can certainly enter into a contract to shift its liability of service tax. The Supreme Court further held that the provisions concerning service tax are relevant only as between the appellant as an assessee under the statute and the tax authorities. This statutory provision can be o no relevant to determine the rights and liabilities between the appellant and the respondent as agreed in the contract between two of them. There was nothing in law to prevent the appellant f .....

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ctors are the same. Clause 9 of the contract provides that it shall be the responsibility of the contractor/advertiser to pay direct to the authority and MCD concerned the advertisement tax or any other taxes levy payable or imposed by any authority and the amount will be in addition to the licence fee quoted above. The Department on the basis of information received from anti evasion branch found that the appellant did not pay the service tax for the services rendered by it and called for addit .....

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d had no intention to violate the provisions of the taxing statutes. The obligation for registration under the Service Tax Rules had escaped the notice of its accounts department and Chartered Accountant//auditors and thus, the omission was neither intentional nor deliberate. After brought the same to the notice, the appellant took steps for registration. Since the appellant had been incurring losses and depending on the grants given by the Government, the appellant moved the Government for gran .....

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as such the liability of service tax is to be apportioned to the extent of 50%. The Adjudicating Authority confirmed the demand along with interest and penalty. The Tribunal upheld the demand. Before the High Court the appellant relied on the judgment of the Supreme Court in Rastriya Ispat Nigam Limited (supra) in which the Supreme Court held that it is possible that it may be passed on. The appellant contended that having entered into contracts in the nature, it was a legitimate expectation tha .....

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