Custom, Excise & Service Tax Tribunal
Engineers India Technical Services vs C.C.& C.Ex, Raipur on 15 January, 2014
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Block No.2, R.K.Puram, New Delhi COURT-I Date of hearing/decision: 15/01/2014 Stay Application No.61577 of 2013 and Service Tax Appeal No.60491 of 2013-SM Arising out of the order in appeal No. 140(ST/RPR-I/2013 dated 30.8.2013 passed by the Commissioner (Appeals), Central Excise and Customs, Raipur (C.G.). For Approval and Signature: Honble Mr. Justice G. Raghuram, President 1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 26 of the CESTAT (Procedure) Rules, 1982? 2 Whether it should be released under Rule 26 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3 Whether their Lordships wish to see the fair copy of the Order? 4 Whether Order is to be circulated to the Departmental authorities? Engineers India Technical Services .. Appellants Vs. C.C.& C.Ex, Raipur . Respondent
Appearance:
Present Shri A.K. Mishra, Consultant for the appellants Present Shri Govind Dixit, A.R. for respondent-Revenue Coram: Honble Mr. Justice G. Raghuram, President Final Order No. 50084/2014 Per Justice G. Raghuram:
Proceedings initiated by a show cause notice date 10.12.20108 culminated in the adjudication order dated 29.2.2012 passed by the Assistant Commissioner, Service Tax , Raipur Division. The appeal preferred by the assessee/appellant herein was rejected by the Commissioner (Appeals), Raipur vide order dated 30.8.2013. Hence the present appeal.
2. At the stage of considering the stay application, since the issue falls within a narrow compass, I dispose of the substantive appeal itself after hearing the ld. Consultant for the appellant and the ld. Authorised Representative for the respondent-Revenue and after waiving the pre-deposit requirement.
3. The petitioner provided commercial or industrial construction services (CICS), a taxable service to M/s Mall Enterprises and M/s Mall Constructions, Nagpur during 2005-2006 to 2007-2008. The appellant was registered for providing the taxable CICS since February 2007. It however neither filed returns nor remitted the service tax on this taxable services provided to M/s Mall Enterprises and M/s Mall Constructions, Nagpur during the period in issue. Audit revealed non-remittance of tax and hence a notice was issued on 11.9.2008 by the concerned Superintendent with subsequent reminders dated 23.9.08 and 6.11.08 calling upon the appellant to pay service tax along with interest and to file all half yearly ST-3 returns. The appellant neither responded nor appeared in response to the notice. Consequently, the show cause notice dated 10.12.20108 was issued.
4. The appellant did not submit any written response to the show cause notice but in response to the notice providing personal hearing Shri Sandeep Kumar Singh, partner of the appellant appeared before the adjudicating authority and submitted that the appellant worked as a sub-contractor to the principal contractor during the relevant period and that the service tax on the consideration received by the principal contractor from the eventual service recipient, was remitted. In support of this assertion, certificates issued by the principal contractor were furnished.
5. In para 13 of the adjudication order, the ld. Assistant Commissioner referred to various material on record including challans and certificates furnished by the appellant. He observed that challans pertaining to M/s Mall Enterprises, Nagpur were on record but none in respect of M/s Mall Constructions, Nagpur. He further recorded that both M/s Mall Enterprises and M/s Mall Constructions had provided services to M/s Hira Ferro Alloys Limited, M/s Jain Carbide & Chemicals Limited and Rayapati Power Generation Pvt. Ltd. and received consideration from those recipients and had discharged the service tax liability; while the appellant had provided service to M/s Mall Enterprises and M/s Mall Constructions, Nagpur, had received consideration from them but not from Hira Ferro Alloys Pvt. Ltd. or the other two entities; and that in the circumstances, there was failure on the part of the assessee in filing returns and remitting the service tax due, as a provider of the taxable CICS. As a result of these findings, the adjudication order confirmed service tax liability of Rs.4,67,582/-; directed recovery of the same along with interest under Section 75 and penalty as stipulated in the order, in terms of Sections 76, 77 and 78 of the Finance Act, 1994.
6. The appellant preferred an appeal contending that Board Circular 7.10.98, a Trade Notice dated 11.6.97 issued by New Delhi Commissionerate and several decisions of this Tribunal including the decision in Viral Builders vs. C.C.E. 2011 (21) STR 457 (Tri-Ahmd.) and Urvi Constructions vs. C.S.T. 2010 (17) STR 302 (Tri-Ahmd.) had clearly ruled that if the principal contractor pays service tax on the entire amount received from the ultimate recipient, the sub-contractor was not liable to remit service tax.
7. Ld. Appellate Commissioner rejected the appeal by placing reliance on the Board Circular dated 23.8.2007 wherein it was clarified that a sub-contractor being essentially a taxable service provider was required to remit tax even if the services provided by such sub-contractors are used by the main service provider for completion of the work. It was further clarified in the Circular that the fact that a given taxable service is intended for use as an input service by another service provider does not alter the taxability of the service provided. On the basis of the clarifications set out in the Board Circular dated 23.8.2007, the Appellate Authority confirmed the conclusion of the primary authority and rejected the appeal.
8. Ld. Consultant for the appellant refers to the Board Circular dated 7.10.98. This Circular clarified that where an architect or an interior decorator sub-contracts a part or the whole of his work to another architect/interior decorator, no service tax is required to be paid by the sub-contractor, provided that the principal architect/interior decorator has paid service tax on the services rendered by him to the client and provided the sub-contracting is in respect of the same service category. A similar clarification was issued vide Board Circular dated 6.6.97. in respect of custom house agent service.
9. These two Boards Circulars, in my respectful view, clearly misstate the legal position and are contrary to the provisions of the Act. Clarifications by the Board are intended to guide field formations, but occasionally tend to achieve the opposite. Provisions of the Finance Act, 1994 clearly enjoin that service tax is remittable (unless otherwise provided in the Statute) by every taxable service provider at every stage of provision of a taxable service. The recipient of a taxable service may be entitled to avail input credit of the service tax remitted, within the ambit of provisions of the Cenvat Credit Rules. The fact that taxable service is provided at various stages or by several agencies sequentially does not alter the trajectory of the legislative provisions. I find no legislative foundation or jural principle in either the Board Circular dated 6.6.97 and the one dated 7.10.98, in so far as these Circulars set out a principle that where a principal architect or a Customs House Agent remits service tax, his sub-contractor, rendering the same taxable service is not liable to service tax.
10. Relying on a similar Board Circular including Circulars dated 17.12.2004, 23.8.2007 and 7.10.98 and following the decision of the Ahmedabad Bench in Urvi Construction and other decisions of this Tribunal in Viral Builders it was concluded that since a taxable service was provided through sub-contractor to the main contractor and the principal contractor had paid service tax; and the Board had also clarified that there cannot be double taxation, there was no tax liability on the sub-contractor.
11. While the principal contractors to whom the appellant herein had provided the taxable CICS services may be entitled to claim cenvat credit on the service tax remitted by the appellant for providing the taxable service, there is no legal basis for the claim that service tax remittance by the principal contractors, extinguishes the appellants service tax liability. I find no legislative or normative basis for such principle, particularly as any such principle renders the concept of Cenvat Credit nugatory.
12. Ld. Consultant for the appellant would also contend that the adjudication is in respect of a liability for three years 2005-06 to 2007-08 and proceedings were initiated invoking the extended period of limitation, vide the show cause notice dated 10.12.2008, beyond the normal period of limitation for a part of the period in issue. It is contended that invocation of the extended period is not justifiable since the appellant was under a bona fide belief that no service tax was remittable by the sub-contractor when the main contractor has remitted the service tax including on the component of service provided covered by the appellant. This contention does not commend acceptance. It requires to be noticed that the Board Circular relied upon by the appellant before the ld. Appellate Commissioner did not pertain to CICS. As adverted to earlier, these Circulars dealt with customs house agent service and architect service. It is axiomatic that while the Board may be authorized to issue any instruction/guidance to field formations, there is no legislative authority for the Board to be issuing comprehensive commentary on the entire gamut of the Finance Act, 1994 The appellant could hardly claim to have been misled by a Board Circular issued in respect of a wholly distinct service and drawing generic jural principles from such circulars. Had the appellant gone through the provisions of the Finance Act, 1994, there would be no occasion for a doubt as to its liability to service tax.
13. On the aforesaid analyses, I find no error in the order of the ld. Commissioner (Appeals) confirming the order of the primary authority warranting appellate interference.
14. The appeal is without merits and is therefore rejected, but without costs.
(Justice G. Raghuram) President scd/ 1