Custom, Excise & Service Tax Tribunal
M/S Jac Air Services Pvt. Ltd vs Cst, Delhi on 18 March, 2013
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No. 2, R.K. Puram, New Delhi 110 066. Principal Bench, New Delhi COURT NO. III DATE OF HEARING : 18/03/2013. DATE OF DECISION : 18/03/2013. Service Tax Appeal No. 129 and 155 of 2008 [Arising out of the Order-in-Original No. 63/VKG/2007 dated 18/12/2007 passed by The Commissioner of Service Tax, New Delhi.] For Approval and signature : Honble Ms. Archana Wadhwa, Member (Judicial) Honble Shri Rakesh Kumar, Member (Technical) 1. Whether Press Reporters may be allowed to see : the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it would be released under Rule 27 of : the 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 : Department Authorities? M/s JAC Air Services Pvt. Ltd. Appellant Versus CST, Delhi Respondent
and vice-versa Appearance Shri B.L. Narasimhan, Advocate for the appellant.
Shri Amresh Jain, Authorized Representative (DR) for the Respondent.
CORAM : Honble Ms. Archana Wadhwa, Member (Judicial) Honble Shri Rakesh Kumar, Member (Technical) Final Order No. 55985-55986/2013 Dated : 18/03/2013 Per. Archana Wadhwa :-
Both the appeals are being disposed of by a common order as they arise out of the same impugned order of Commissioner. In as much as Commissioner has confirmed the service tax of Rs. 1,51,37,923/- alongwith confirmation of interest, the assessee has filed the present appeal. The Revenues appeal is against that part of the impugned order vide which he has dropped the penalty, by invoking the provisions of Section 80 of the Finance Act, 1994.
2. We have heard Shri B.L. Narasimhan, learned Advocate appearing for the appellant and Shri Amresh Jain, learned DR appearing for the Revenue.
3. As per facts on record, the appellant entered into an agreement dated 30/3/02 with M/s Airport Authority of India (hereinafter referred to as AAI) for handling of cargo at Delhi International Airport. M/s AAI is engaged in providing cargo handling services to various airlines, who unload the imported cargo at Delhi Airport and are charging the other airlines for providing the said cargo handling services. M/s AAI is registered with the department of service tax and is discharging the entire service tax on the said services being provided by them to various airlines. The said service tax is being paid by M/s AAI on the entire value of the services rendered by them to their various customer airlines.
4. As M/s AAI has further engaged the present appellant for doing the job of loading, unloading, packing, unpacking of imported cargo, they were paying the present appellant out of the total consideration received by them from the other airlines. Revenue by entertaining a view that the services of cargo handling are being provided by the present appellant to M/s AAI, issued a show cause notice dated 30/8/06, raising demand of service tax against the appellant for the period August 2002 to 31st May 2006. It stands alleged in the show cause notice that by providing the above services to M/s AAI, they have undertaken the service of cargo handling, which is leviable to service tax. Accordingly, notice proposed to confirm the service tax alongwith interest and to impose penalty on the appellant.
5. It is seen that during the course of adjudication, appellant took a categorical stand that they are not providing cargo handling services but are providing different category of manpower to M/s AAI, for doing the job of loading, unloading, packing, unpacking etc. all such operations are being done by them under the supervision and control of M/s AAI. As such, they contended that since the service of supply of manpower was not taxable service prior to 16th June, 2005, they cannot be liable to pay service tax.
Apart from that they contended that M/s AAI has paid the service tax on the entire value received by them from the other airlines and the appellant being a sub-contractor of M/s AAI for providing the same services, no separate service tax can be confirmed against them. They also contested the demand on the point of limitation.
6. The above submissions do not stand accepted by the Adjudicating Authority, who observed that the appellants cannot be considered to be sub-contractors as they are providing cargo handling services independently to M/s AAI. The fact that M/s AAI has paid the service tax on the entire consideration received by them from the other airlines, cannot dilute the appellants liability to pay service tax on the services rendered by them to M/s AAI. The Adjudicating Authority also upheld the invocation of longer period of limitation on the ground that the appellant has not disclosed the complete facts to the Revenue. However, he did not impose any penalty on the appellant on the ground that the entire tax has been paid by M/s AAI in their capacity as cargo handling agency and the tax now being confirmed against the present appellant would be available as credit to M/s AAI. He also observed that the appellant got registered subsequently and started payment of service tax, they are not liable to penalty. He also observed that there was earlier an understanding that the tax was required to be paid only at the final stage and not by the sub-contractor as generally understood in the trade. He observed that in the present case CBECs Circulars and Minutes of the Meeting are relevant for the limited purpose and the general understanding in the trade cannot be undermined as contested by the party. Accordingly, he did not impose any penalty.
7. The said order is impugned by the assessee as also by the Revenue.
8. We intend to dispose of the appeal on a short ground, without going into the merits of the case as to whether the appellant has provided cargo handling services or not. There is no dispute about the fact that M/s AAI is providing cargo handling services to the other airlines and is discharging the entire tax liability at the full consideration received by them from the other airlines. It is out of the said consideration, that a part is being given to the present appellant as a sub-contractor, for doing the job of loading, unloading, packing and unpacking etc. The fact that M/s AAI has paid the entire service tax on the full consideration does not stand disputed by the Commissioner.
During the relevant period there were various Circulars and trade notices by the Commissionerate clarifying that where the principle service provider discharged his duty liability on the entire value of the services, a separate liability cannot be carved out against the sub-contractor. The said Circulars stands taken note of by the Tribunal in various judgments and its stand held that where the entire service tax has been paid on the full consideration of the services, the sub-contractors liability would not arise to pay service tax again on the part of principle service. One such reference can be made to the Tribunals decision in the case of OIKOS vs. CCE, Bangalore III reported in 2007 (5) S.T.R. 229 (Tri. Bang.). After taking note of the Boards Circular dated 7/10/98 as also Delhi Commissionerate Trade Notice No. 53/CE (ST)/97 dated 4/9/97, Tribunal held that as the main service provider has discharged the duty liability, no separate service tax can be confirmed against the sub-contractor. To the similar effect is the Tribunal decision in the case of Viral Builders vs. CCE, Surat reported in 2011 (21) S.T.R. 457 (Tri. Ahmd.) observing that service stands provided only once and as such tax is not payable twice for the same service. Further in the case of Sunil Hi-Tech Engineers Ltd. vs. CCE, Nagpur reported in 2010 (17) S.T.R. 121 (Tri. Mumbai), the service tax confirmed against the sub-contractor was set aside on the ground that the main contractor has already paid the service tax and the matter was remanded to verify the above effect. The same ratio stand laid down by the Tribunal in the case of Newton Engg. & Chemicals vs. CCE, Vadodara reported in 2008 (12) S.T.R. 378 (Tri. Ahmd.) and by the Larger Bench decision of the Tribunal in the case of Vijay Sharma & Co. vs. CCE, Chandigarh reported in 2010 (20) S.T.R. 309 (Tri. LB).
9. By applying the ratio of the above decisions to the facts of the present case, we find that in as much as the payment of service tax on the full cargo handling service does not stand disputed by the Adjudicating Authority, second time confirmation of service tax on that part of the services, which stands further delegated to the appellant, cannot be upheld. We also note that there are certificates given by M/s AAI indicating that they have paid service tax on the full considerations and the job contract given to the appellant is in the nature of sub-contractor at a lump-sum rate. As such, there is no dispute about payment of full service tax by M/s AAI. In the light of the discussion above, we set aside the confirmation of demand of duty on the above point, without dealing with the appellants contention that the entire demand is barred by limitation, though we find that Commissioner himself has not imposed any penalty on the appellant on the point of bonafide in which case extended period of limitation is not available to the Revenue.
10. In as much as we allowed the assessee appeal and has set aside the confirmation of demand of service tax, the Revenues appeal for imposition of penalty on the assessee does not survive. The same is accordingly rejected. Both the appeals are disposed of in above manners.
(Operative part of the order pronounced in the open court.) (Archana Wadhwa) Member (Judicial) (Rakesh Kumar) Member (Technical) PK ??
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