TMI Blog2022 (10) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... /2006-ST dated 01.03.2006. Hence this claim made by the appellant is under a notification which was not available after 01.03.2006. Hence the claim made under this notification is denied. Time Limitation - Suppression of facts or not - HELD THAT:- The Appellant concealed the correct taxable amount with the service tax department, until the Departmental officers initiated an inquiry in this regard. These facts were suppressed with intent to evade the payment of service tax due on various taxable services provided by them thereby facilitating the evasion of service tax payable on the said services so rendered by them. Thus it the extended period, as provided for under the proviso to sub-section (1) of section 73 ibid for recovery of such service tax not paid and/or short paid by Appellant has been correctly invoked by the revenue authorities. Penalties - HELD THAT:- When the ingredients for invocation of the extended period of limitation were present, the penalties imposed on the appellant under Section 78 of Finance Act, 1994 are upheld - As appellant had not taken registration and had not filed ST-3 returns within the prescribed time, penalty imposed under Section 77 is j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against the appellant. It was noticed that the noticee charged service tax separately in few of the invoices whereas in other cases no service tax was shown separately; that they have obtained service tax registration but not followed the proper procedure; that being a sub-contractor, the noticee did not discharge service tax liability under advice from Gammon India Ltd. 2.2 Appellant thus contravened the provisions of section 66, section 68, and section 70 of the Finance Act, 1994 read with rule 5, 6 7 of the Service Tax Rules, 1994 in as much as i. they have failed to determine and pay the service tax due on the service rendered to their customers as per the provisions of section 66 and section 68 ibid read with rule 6 ibid; ii. they have failed to submit returns in the form ST 3 to the service tax department on due date as per the section 70 ibid read with rule 7 ibid; iii. they have failed to maintain proper records under rule 5 ibid. 2.3 Accordingly a notice dated 21.10.2011 was issued to appellant, requiring them showing cause as to why: i. service tax totally amounting to Rs. 1,25,36,776.00 not paid during the period from 2006-07 to 2008-09, should not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vestigation Agency. Thus, the Appellant had Bonafide belief which was backed by evidentiary documents. Conflicting decisions instruction during disputed period: Trade Notice 5/98-ST dated 14-10-1998 of Indore Commissionerate in respect of certain services clarifying that if Main Contractor pays ST, then sub- contractor need not pay ST. However, in 2007 and 2011, the Board held that sub-contractor is liable to pay ST. The Appellant wishes to quote following case laws: Vinoth Shipping Services 2021 (55) GST L 313 (Tri- Chennai) Murari Lal Singhal 2019 (25) G STL 45 (Tri-Del) Veejay Marketing 2019 (22) G S T L 211 (Tri- Chennai) The extended period is upheld on the grounds of suppression as the Appellant failed to give evidence of payment of Service Tax by Gammon India. This conclusion is completely incorrect misleading as in the course of investigation, statement of Shri Yatin Rawal, Deputy General Manager (Internal Audit) of Gammon India Ltd was recorded on 12-01-2009 wherein he admitted that Gammon India asked the Appellant not to levy Service Tax. The said Authorised Person also stated in his statement that Gammon India Ltd had issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their service tax liability except in respect of services provided to M/s Gammon India Limited in capacity of sub-contractor. The reason for non-payment of service tax on the taxable services provided to M/s Gammon India Limited is mainly that they are providing services in capacity of subcontractor and that they have not received Service tax from them. It is further asserted that they have not paid the service tax liability (service provided as sub contractor) on the advice of M/s Gammon India Limited On verification of record submitted by the appellant, it is observed that they have charged and shown service tax separately in few of the invoices whereas in other invoices no service tax is shown separately. They have received/ collected service tax of Rs.1,44,904/- for the period 2007-08 and Rs.14,49,484/- for the period 2008-09 (till Oct. 2008) but not paid the same. Since the appellant has deposed that as sub-contractor, he has not discharged his service tax liability under advice from the main contractor; enquiries were then caused accordingly. In background of this factual position, certain undisputed facts are mentioned as below: Appellant has pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion by themselves that they are liable to pay duty the issue is resolved squarely by the Board vide its circular No. 96/7/2007-ST, dated 23.07.2007 wherein it has been clarified that a sub-contractor is essentially a taxable service provider and liable to pay service tax. Besides, para 4 of the CBE C circular No. 138/7/2011-ST dated 06.05.2011 specifically states that service provided by the sub- contractors/consultants and other service providers are classifiable as per section 65A of the Finance Act under respective clause of sub-clause (105) of section 65 of Finance Act, 1994. 16. I observe that there are several allied allegations against the noticee. One such is that they had not declared these facts to the department and willfully concealed and suppressed the same with intent to evade payment of service tax. Had the department not noticed, non-payment of service tax would have been undetected. Besides, in view of the discussion in foregoing paras, a pre-meditation for non-compliance of tax liability on their part is obvious. Accordingly invoking of extended period under proviso to section 73(1) of the Finance Act, 1994 is justified. I find from the case records that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Master Circular dated 23 August, 2007 issued by the Government of India, Ministry of Finance. The Circular noticed that when Service Tax was introduced in the year 1994 there were only three taxable services, but later 100 services had been specified as taxable services and that since the introduction of Service Tax, number of clarifications had been issued, but it had become necessary to take a comprehensive review of all the clarifications keeping in view the changes that had been made in the statutory provisions, judicial pronouncements and other relevant factors. The relevant portion of the Master Circular, insofar as it relates to sub-contractors, is reproduced below : 999.03/ 23-8- 2007 A taxable service provider outsources a part of the work by engaging another service provider, generally known as sub-contractor. Service tax is paid by the service provider for the total work. In such cases, whether service tax is liable to be paid by the service provider known as sub- contractor who undertakes only part of the whole work. A sub-contractor is essentially a taxable service provider. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 23 August, 2007 was issued superseding all the earlier Circulars, Clarifications and Communications. 15 . It is not in dispute that a sub-contractor renders a taxable service to a main contractor. Section 68 of the Act provides that every person, which would include a sub-contractor, providing taxable service to any person shall pay Service Tax at the rate specified. Therefore, in the absence of any exemption granted, a sub-contractor has to discharge the tax liability. The service recipient i.e. the main contractor can, however, avail the benefit of the provisions of the Cenvat Rules. When such a mechanism has been provided under the Act and the Rules framed thereunder, there is no reason as to why a sub-contractor should not pay Service Tax merely because the main contractor has discharged the tax liability. As noticed above, there can be no possibility of double taxation because the Cenvat Rules allow a provider of output service to take credit of the Service Tax paid at the preceding stage. 16 . It is in this light that the main contention of Learned Counsel for the Respondent that if a sub-contractor is required to pay Service Tax when the main contracto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess. In the instant case, if the principal has already paid the Service Tax, then the same cannot be demanded from the appellant. As per the clarification of the Board s Circular dated 23-8-2007 as well as dated 7-10-1998, if the principal had not paid the Service Tax then the same can be charged. If the Service Tax has already been paid by the principal, then the same cannot be demanded again. 19 . M/s. Dhaneshra Engineering Works followed the aforesaid decision in BCC Developers and Promoters Pvt. Ltd. 20 . In M/s. Edac Engg. Ltd., the Division Bench, after placing reliance upon the decision of the Tribunal in Urvi Construction, observed : 6.2 We are therefore of the considered opinion that these case laws are distinguishable from the decision taken by this very Bench in the case of the present appellants Edac Engineering Ltd. in Final order dated 19-12-2016. We also find that the very same Board s Circular No. 97/8/2007-S.T., dated 23-8-2007, relied upon by the Ld. AR has been taken note of by the Tribunal in Urvi Construction (supra). This being so, we have no hesitation in ruling that when Service Tax has been paid by the main contractor, charging the su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Cenvat Credit Rules, 2004 will come into play subject to fulfilment of conditions therein. It is nobody s case that the sub- contractors per se are not liable to service tax even if they rendered taxable service [emphasis supplied] 24 . The same view was taken by the Division Bench of the Tribunal in CCE S.T., Raipur v. M/s. J.K. Transport, reported in 2017 (9) TMI 993 - CESTAT New Delhi. The relevant paragraph is reproduced below : 5. We find that the CBEC vide Circular dated 23-8-2007 has clarified that the services provided by the sub-contractor is a taxable service, even if the same is used for completion of the work by the main service provider. Thus, for providing the taxable service, the sub-contractor is liable for payment of service tax on provision of such service 25. Similar views were taken by the Tribunal in (i) Max Logistics Ltd. v. Commissioner of Central Excise, Raipur, reported in 2017 (47) S.T.R. 41 (Tri. - Del.); (ii) Hargovind Electric Decorators v. Commissioner of Central Excise, Jaipur-I, reported in 2016 (43) S.T.R. 619 (Tri. - Del.); and (iii) Sew Construction Ltd. v. Commissioner of Central Excise, Raipur, reporte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sible prior to this date when sub-broker was not within the fold of law during that period. 27 . The Commissioner did express in the impugned order that under the Cenvat Scheme every stage of provision of service is required to be taxed and if a sub-contractor discharges the Service Tax liability, it will not result in double taxable even if the main contractor discharges the Service Tax liability because the credit of the earlier tax paid is available at a subsequent stage, but it is because of the decision of the Tribunal in Urvi Construction, that the Commissioner held that double taxation would result if a sub-contractor is also required to discharge Service Tax liability when the main contractor has discharged the entire liability. 28 . Learned Counsel for the Respondent has, however, relied upon the decision of the Supreme Court in Larsen and Toubro Ltd. v. Additional Deputy Commissioner of Commercial Taxes and Anr., reported in 2016-TIOL-155-SC-VAT. In this case, the contracts which were secured by the Appellant therein were works contract and a part thereof was assigned to the sub- contractor who had submitted returns and paid taxes for the execution of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itation and have also claimed that abatement as per the Notification No 15/2004-ST dated 10.09.2004. 4.7 It is evident from the facts of the case that the appellant are merely providing the taxable services simplicitor without any element of transfer of the material along with the service. Hon ble Supreme Court has in case of Larsen and Tubro Ltd [2015 (39) S.T.R. 913 (S.C.)] observed as follows: 24 . A close look at the Finance Act, 1994 would show that the five taxable services referred to in the charging Section 65(105) would refer only to service contracts simpliciter and not to composite works contracts. This is clear from the very language of Section 65(105) which defines taxable service as any service provided . All the services referred to in the said sub- clauses are service contracts simpliciter without any other element in them, such as for example, a service contract which is a commissioning and installation, or erection, commissioning and installation contract. Further, under Section 67, as has been pointed out above, the value of a taxable service is the gross amount charged by the service provider for such service rendered by him. This would unmistakably ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s on record which led to the belief. It is not the Appellant s case that the belief based on a ruling of the some authority that it not liable to pay service tax on outward transportation. A mere statement to the effect that the Appellant was under a bona fide belief of non liability of paying tax cannot be accepted in the face of clear provision of law. Thus, it is not possible to accept the contention that the Appellant had bona fide belief of for non-payment of tax, so as to invoke Section 80 of the Act. 4.9 A statement of Shri Sukhdeo Vasudeo Yadav (proprietor of appellant} was recorded on 10.11.2008 wherein he stated that he has paid the service tax but has not filed any service tax return so far and submitted copies of taxable invoices, bank pass book and bank statement for 2006-07; that as a sub-contractor, he has provided commercial industrial construction service to Gammon India Ltd, Mumbai, Japsin Jacob Wire Drawing P Ltd, New Delhi and Man Infra Project Ltd, Mumbai but has not paid any service tax till 31.03.2008 being a sub-contractor; that from 01.04.2008, he started charging service tax on the service provided as sub-contract and that the same would be credited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e are bound to uphold the penalties imposed on the appellant under Section 78 of Finance Act, 1994 in view of the decision of Hon ble Apex Court in case of Rajasthan Spinning Mills [2009 (238) ELT 3 (SC))] wherein following has been held: 20. At this stage, we need to examine the recent decision of this Court in Dharamendra Textile (supra). In almost every case relating to penalty, the decision is referred to on behalf of the Revenue as if it laid down that in every case of non-payment or short payment of duty the penalty clause would automatically get attracted and the authority had no discretion in the matter. One of us (Aftab Alam, J.) was a party to the decision in Dharamendra Textile and we see no reason to understand or read that decision in that manner. In Dharamendra Textile the court framed the issues before it, in paragraph 2 of the decision, as follows : 2. A Division Bench of this Court has referred the controversy involved in these appeals to a larger Bench doubting the correctness of the view expressed in Dilip N. Shroff v. Joint Commissioner of Income Tax, Mumbai Anr. [2007 (8) SCALE 304]. The question which arises for determination in all these appeals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision in Dharamendra Textile can be said to hold that Section 11AC would apply to every case of non-payment or short payment of duty regardless of the conditions expressly mentioned in the section for its application. 22. There is another very strong reason for holding that Dharamendra Textile could not have interpreted Section 11AC in the manner as suggested because in that case that was not even the stand of the revenue. In paragraph 5 of the decision the court noted the submission made on behalf of the revenue as follows : 5. Mr. Chandrashekharan, Additional Solicitor General submitted that in Rules 96ZQ and 96ZO there is no reference to any mens rea as in section 11AC where mens rea is prescribed statutorily. This is clear from the extended period of limitation permissible under Section 11A of the Act. It is in essence submitted that the penalty is for statutory offence. It is pointed out that the proviso to Section 11A deals with the time for initiation of action. Section 11AC is only a mechanism for computation and the quantum of penalty. It is stated that the consequences of fraud etc. relate to the extended period of limitation and the onus is on the revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le point tax law without being a multiple taxation legislation. In absence of any statutory provision to the contrary, providing of service being event of levy, self same service provided shall not be doubly taxable. If Service tax is paid by a sub-broker in respect of same taxable service provided by the stock-broker, the stock broker is entitled to the credit of the tax so paid on such service if entire chain of identity of sub broker and stock broker is established and transactions are provided to be one and the same. In other words, if the main stock broker is subjected to levy of service tax on the self same taxable service provided by sub-broker to the stock broker and the sub-broker has paid service tax on such service, the stock broker shall be entitled to the credit of service tax. Such a proposition finds support from the basic rule of Cenvat credit and service of a sub-broker may be input service provided for a stock-broker if there is integrity between the services. Therefore, tax paid by a sub-broker may not be denied to be set off against ultimate service tax liability of the stock broker if the stock broker is made liable to service tax for the self same transactio ..... 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