Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise, ... vs M/S Akruti Projects on 12 August, 2014
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. IV Appeal No. ST/36/09 (Arising out of Order-in-Appeal No. P-III/192/08 dated 23.10.2008 passed by the Commissioner of Central Excise (Appeals), Pune-III). For approval and signature: Honble Shri Anil Choudhary, Member (Judicial) ======================================================
1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it should be released under Rule 27 of the : Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair copy : Seen of the order? 4. Whether order is to be circulated to the Departmental : Yes authorities? ====================================================== Commissioner of Central Excise, Pune-III Appellant Vs. M/s Akruti Projects Respondent Appearance: Shri N.N. Prabhudesai, Supdt. (AR) for Appellant Shri Bharat Raichandani, Advocate for Respondent CORAM: SHRI ANIL CHOUDHARY, MEMBER (JUDICIAL) Date of Hearing: 12.08.2014 Date of Decision: 12.08.2014 ORDER NO. Per: Shri Anil Choudhary
The Revenue is in appeal against Order-in-Appeal No. P-III/192/08 dated 23.10.2008 passed by the Commissioner of Central Excise (Appeals), Pune-III.
2. The brief facts of the case are that the assessee-respondent is a service provider and is registered with the Central Excise Department under the category of Commercial or Industrial Construction Service. M/s Devi Constructions Co. Pvt. Ltd. sub-contracted some of their civil work undertaken for their client to the respondent. The respondent claims that both M/s Devi Constructions and the respondent paid Service Tax on the same transaction. The tax was paid as per Notification No. 1/2006 dated 1.3.2006. The amount of tax so paid was Rs.20,34,317/-. The respondent filed a claim for refund of this amount with lower authority as the tax liability being discharged by the main contractor, they as a sub-contractor were not required to pay the tax again. A show-cause notice in January, 2008 was issued to the respondent asking them to show cause as to why their claim should not be rejected as tax was correctly paid by the respondent on the service provided to the main contactor. The respondent had submitted in their reply to the show-cause notice that the sub-contractor is not required to pay Service Tax when the main contractor pays Service Tax. There were clarifications to this effect from the Board. The only condition was that both the main and sub-contactor should have provided the same service. In their case the same category of service was provided by M/s Devi Constructions and them. No tax paid was reimbursed to them by the main contractor. They had relied on some case laws also and had in their personal hearing submitted that the amount had not been recovered from the customers. C.A.s certificate was also submitted. They had also contended that their civil contracts were in the nature of works contract which came to be taxed only w.e.f. 1.6.2007. The lower authority rejected the claim holding that the respondent had not submitted any documentary evidence to show that they were sub-contractors of M/s Devi Constructions. The jobs done by the respondent were final and no activity was carried out by the main contractor. The respondent had carried out constructions work at the site of M/s Devi Constructions as a contractor.
2.1 Being aggrieved, the respondent had preferred appeal before the Commissioner (Appeals) on the ground that they have done work as sub-contractor of M/s Devi Constructions, who is the main contractor and said main contractor has also paid the amount of Service Tax. The view that sub-contractor is individually accountable for paying Service Tax has been clarified by Boards Circular dated 23.8.2007 and refund in the preset case is related to July, 2006 to March, 2007 and accordingly, the said circular of the Board dated 23.8.2007 was not applicable. The learned Commissioner (Appeals) have, recorded the findings that the respondent have claimed refund of the Service Tax paid, which they had paid for work done as sub-contractor of M/s Devi Constructions and as a main contractor, Devi Construction has also paid the taxes. The service tax was not again chargeable from the respondent assessee, as the charging provisions Section 66 of the Finance Act, 1994, 1994 does not provide to charge the same transaction twice, both by the main contractor and the sub-contractor. Further finding was recorded that the main contractor have discharged the tax liability, sub-contractor i.e. the respondent herein was under no obligation to discharge the liability of Service Tax. It was further noticed that the tax paid by the respondent assessee was not reimbursed by his main contractor and has been shown in the Books of account of the respondent as receivable. Further reference was made to the Trade Notice No. 5/98 dated 14.10.1998 and Trade Notice No. 53-CE(Service Tax)/97 dated 1.7.1997, the ground of which is that the main contractor is liable to pay tax in respect of the sub-contracted service provided that sub-contracting is of the same service category. Further reliance was placed on the ruling of the Division Bench of this Tribunal in the case of Evergreen Suppliers Vs. Commissioner of Central Excise, Mangalore 2008 (8) STR 467 (Tri-Bang), wherein it was held that where the main contractor have paid the Service Tax with respect to the same work and the sub-contractor has also deposited the tax and claimed for refund, the refund was rightly claimed. It was further observed that the adjudicating authority has erred in observing that as the respondent assessee is sub-contractor, has executed almost the whole of the contract and therefore, the respondent cannot be treated as a sub-contractor. The learned appellate authority did not agree with the finding of the adjudicating authority and further observed that the intention behind making the main contractor pay tax is not to let the margin of the main contractor go out of the service tax net. In fact in the instant case, the main contractor has charged tax on the value charged by the respondent to the main contractor and the margin of main contractor charged on the customer. If the reasoning of the adjudicating authority is accepted, the margin on the service provided by the main contractor will go untaxed. The billing is done by the main service providers and the agreement is between the main service provider and the customer. Thus, it was held to be illogical that tax is paid by the main service provider. The entire or part of service to be provided can be sub-contracted but that does not make the sub-contractor liable to Service Tax. Further, finding of fact was that the main contractor have correctly discharged the Service Tax liability and in the effect the tax paid by the respondent assessee as sub-contractor can be refunded to them and accordingly, the appeal was allowed in favour of the respondent assessee.
3. Being aggrieved by the impugned order, the Revenue is in appeal before this Tribunal. The grounds raised by the Revenue is that the Commissioner (Appeals) have erred in allowing the refund on the ground that the main contractor who had, as per agreement with their clients, undertaken to provide service, were liable to pay tax, and the sub-contractor was under no obligation to pay tax. Hence, the Commissioner (Appeals) has failed to appreciate the law that the Service Tax on Commercial/Industrial Construction Service was imposed w.e.f. 10.9.2004 and has been defined under Section 65(109)(zzq) of the Finance Act, 1994, which defined the taxable service is a service provided, or to be provided to any person, by any other person, in relation to service to main contractor, is essentially a taxable service provider. The fact that the service provided by such sub-contractor are used by the main service provider for completion of the work, does not in any way alter the fact of providing of taxable service by the sub-contractor and accordingly, the respondent assessee as a sub-contractor is liable to pay Service Tax and the same was correctly paid by the respondent.
3.1 The next ground raised is that the learned Commissioner (Appeals) has overlooked the Boards Circular No. 96/7/2008-ST dated 23.8.2007, wherein it was clarified that sub-contractor is essentially a taxable service provider and accordingly, liable to pay Service Tax.
3.2 The next ground is that the respondent have not recovered Service Tax paid by the main contractor and also if they have not passed on the burden of Service Tax on the customers or any other person, is for the reason that the main contractor M/s Devi Constructions, wants to avail the benefit of exemptions Notification No. 1/2006 dated 1.3.2006, wherein a condition is provided that notification shall not apply in case, where the CENVAT Credit of duty on inputs or capital goods or the CENVAT Credit of Service Tax on input services, used for providing such taxable service, has been availed under the provisions of the Cenvat Credit Rules, 2004.
3.3 The next ground taken is that the Commissioner (Appeals) has erred in relying on the Trade Notices No. 5/98 and 53/97 and holding that when the main contractor have discharged the Service Tax in respect of the sub-contracted service, the sub-contractor is not liable for the same.
3.4 The learned AR appearing for the Revenue further relies on the third Member ruling of this Tribunal in the case of Sunil Hi-tech Engineers Ltd. Vs. Commissioner of Central Excise, Nagpur 2014-TIOL-160-CESTAT-MUM, wherein at para 7.3, learned Member (Technical) has held as follows: -
7.3. With regard to the question of the liability of sub-contractor to pay service tax when the main contractor has discharged the tax liability, this very same issue was considered by a larger bench of this Tribunal in the case Vijay Sharma & Co. [2010 (20) STR 309 (Tri-LB)] In the said case, it was held that-
"The scheme of service tax law suggests that it is a single point tax law without being a multiple taxation legislation. In the 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....."
This decision was followed by another co-ordinate bench of this Tribunal in Sew Construction Ltd. case [2011(22) STR 666 (Tri. Del)] wherein it was held that -
"we do not find any provision in the Finance Act, 1994 to grant immunity to the sub-contractor from levy of service tax when undisputedly taxable services were provided by them.."
Therefore, the argument that since the main contractor has discharged the service tax and therefore, the sub-contractor need not pay service tax is without any legal basis and is quite contrary to the concept and practice of CENVAT Credit Scheme. The Larger Bench prevails over the other decisions of the Tribunal in this regard. Accordingly, we reject this contention raised by the appellant in toto.
There was a Difference of Opinion, in which the Member (Judicial), myself, has held at para 10.1 as follows: -
10.1 It is noteworthy that works-contract have been made taxable w.e.f. 01.06.2007 under Section 65 (105) (zzzza). It is seen that the appellant have accepted the liability under the head 'commercial or industrial construction'. It is further seen that the appellant have discharged liability to Service Tax where it is the main contractor. Only where the appellant have worked as a sub-contractor, it have not paid after confirming from the main contractor. Further the appellant have paid tax as sub-contractor till 28.02.2006. Thereafter w.e.f. 01.03.2006 Notification No. 15/04, was replaced by Notification No. 01/2006, which prohibited availment of CENVAT credit on inputs if abatement of 67% on materials is claimed. Accordingly, as advised, the appellant stopped paying Service Tax as a sub-contractor w.e.f. 01.03.2006, to avoid double taxation. The appellant relied on the beneficial circular(s) and rulings noticed above. As the position was clarified by Revenue vide master circular No. 96/7/2007 dated 23.08.2007, that a sub-contractor is obligated to pay Service Tax, irrespective of whether the main contractor have paid, it is categorically held that the appellant will be liable to pay Service Tax as a sub-contractor, w.e.f. 23.08.2007. Due to Difference of Opinion, the question was framed as follows: -
(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 of Section 76 & 78 of the Finance Act, 1994 as held by the Ld. Member (Technical) relying on the decisions of the Hon'ble High Court of Kerala in the case of Krishna Poduval [2006 (1) STR 185 (Ker)], and of the Hon'ble Apex Court in the case of Chairman SEBI Vs. Shriram Mutual Fund & Another [2006-TIOL-72-SC-SEBI] and Rajasthan Spinning & Weaving Mills [2009 (238) ELT 3 (SC)] 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).
The learned third Member, on reference, held as follows:-
18. I have carefully gone through the various arguments advanced by the Ld. Advocate for the appellant, learned A.R. as also various arguments written by my Learned Brothers. At the outset, I think it would be appropriate to understand why circulars are issued by the board and their scope or validity. Most of the circulars issued by the board are to explain the intentions of particular provisions of Customs, Central Excise and Service Tax. These circulars also give interpretation of law. Circulars are generally issued with reference to a particular commodity or service and explains the relevant law at that point of time. There is no concept of withdrawing or superseding the circulars in general. It is only when Board changes its view on a issue consequent to the decision of the Hon'ble Supreme Court, Hon'ble High Court or this Tribunal or for some other reason that the circulars are modified or superseded. However, the circulars are to be applied only as per law as it exists at that point of time and with reference to the commodity/services. This is true even in case of service tax. In 2007 an initiative was taken by the Board so that circulars in respect of various services were consolidated in one single circular, known as master circular. At that point of time it was also realized that the large number of circulars have lost their relevance long back due to amendment in the law. Accordingly, such circulars were not part of the new master circular or were stated to be withdrawn. At that point, a general clarification as under was issued-
999.03 /23.08.07 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. The fact that services provided by such sub-contractors are used by the main service provider for completion of his work does not in any way alter the fact of provision of taxable service by the sub-contractor.
Services provided by sub-contractors are in the nature of input services. Service tax is, therefore, leviable on any taxable services provided, whether or not the services are provided by a person in his capacity as a sub-contractor and whether or not such services are used as input services. 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.
At times circulars are also used by the board to take care some administrative difficulties in the administration of tax as particular way of implementation may cause undue hardship. Service tax was introduced in 1994 on three services, in 1996 another three services were added and in 1997 additional three services were brought under the service tax net. At that point of time service tax was not covered by Cenvat credit system i.e. credit of input services or inputs was not available while providing any other output service. Around 2002, concept of Cenvat Credit was extended to the services and in 2004 it was extended to the manufacturing and service sector both in a unified manner. In 1997-1998, at the time of introduction of specific services it was realized that in respect of certain services main service producer appoints certain sub-service provider, who may be doing part of the main service and since concept of Cenvat Credit was not extended to services, provider of such service would have been put to disadvantage inasmuch as service tax would have been paid by the sub-service provider and the main service provider would also be required to pay the service tax. This difficulty was being faced in respect of certain services, three different circulars covering one specified service each were issued during the period 6th June 1997 to 11th July 1997. In 1998 certain additional service became taxable. In respect of one such service an additional circular was issued on 7.10.1998. These four circulars are in respect of specific services. These clarifications were not clarifying any legal interpretation or any provisions of Act/Rule but more were in the administrative nature to sort out cascading effect on service tax. Perhaps, a better way would have been to issue notification achieving the same objective. Be that it may be, this Tribunal cannot be extended the scope of such circulars to other services, particularly which were not in existence at that time. Service tax law has been extended to a large number of services from 2002 onwards and scheme of Cenvat Credit was extended to services, no such circular has been issued in respect of any of the services which became taxable in 2002 or afterwards. Even in respect of services which were taxable before 2002, the earlier circulars became redundant in view of the change in law. Learned Advocate's argument that the old circulars were withdrawn only with the issue master circular on23.8.2007 is not relevant at all, particularly in view of the fact that the service being dealt in the present case is Commercial or industrial construction service which become taxable when the Cenvat credit scheme was already available. The four circulars which were issued in 1997-1998 in respect of four specified services were in any case redundant even in respect of those four services from 2002 onwards. In 2007, all that was clarified was that sub-contractor is also a service provider, and is liable to pay tax.
19. I also note that in the present case the appellant had no doubt about the provisions of law and the fact that his activity was chargeable to service tax. This is evident from the fact that the appellant was paying service tax before 1.3.2006. From 1.3.2006 the reason for stopping to make payment is only that the main contractor was specifically made ineligible to take credit of input services vide notification no. 1/2006. In my opinion if law specifically prohibits doing something, the same cannot be circumvented by stopping to pay duty and claiming benefit of circulars which were not issued even in respect of that service and was also prior to the law at the relevant time i.e. introduction of Cenvat credit scheme to services. Learned Advocate has stated that there is no rationale to restrict the credit of input services in 2006. The Learned Advocate has also stated that it was unintentional. I am unable to subscribe to this argument. If at all, restriction on input service credit was unintentional, the same would have been amended within a gap of few weeks or months. The fact remains, the said restriction has not been lifted in all these years. This therefore cannot be called as unintentional or unreasonable restriction. In fact, perhaps the position prior to 1.3.2006 was unintentional as the contractors were able to reduce their tax liability by creating more than 2 or 3 levels of sub-contractors. This contention/argument of the Ld. Advocate therefore does not hold water. In any case, the Tribunal is required to interpret the law as it exist. We also note that the notification No.1/2006-S is not being availed by the appellant but by main contractor. If at all such argument has to be given it has to be considered by main contractor who is not even appellant in this case. There does not appear to be any dispute between Revenue and main contractor on the interpretation of Notification No. 1/2006-ST. By majority order, it was held that the sub-contractor is liable to pay Service Tax on services rendered by him. So far the eligibility of the benefit Notification No. 12/03-ST and 1/2006-Service Tax, the matter was remanded to the adjudicating authority, who shall examine in the light of the evidence available on record or on basis of documentary evidence, which the appellant shall submit before the adjudicating authority. The Service Tax demand was directed to be recomputed thereafter in accordance with law.
3.5 Thus, relying on the aforementioned order in the case of Suni Hi-Tech Engineers Ltd. (supra), the Revenue prays for allowing its appeal.
4. The learned Counsel for the respondent argues that the Service Tax is destination based tax and the very charging Section 66 of the Finance Act, 1994 provides there shall be liability of tax (herein referred to as Service Tax) @ 12% of the value of taxable services referred to in various sub-clauses of clause (105) of Section 65 and collected in such manner as may be prescribed, provided that the provisions of the Section 66 shall not apply w.e.f. 1.7.2012 vide Notification No. 22/2012-ST dated 5-6-2012.
4.1 Thus, from the plain reading, it is evident from Section 66 that the charging section does not provide for multi-point taxation rather provides for destination based taxation and accordingly, the tax cannot be collected twice in respect of the same transaction or services. He further relies upon the ruling in the case of All India Tax Federation Vs. Union of India 2007 (7) STR 625 (SC), wherein the Hon'ble Supreme Court have observed that the concept of Value Added Tax (VAT), which is a general tax, shall apply in principal, to all of commercial activities involving production of goods and provisions of service. VAT is a consumption tax and is borne by the consumer. In the light of this observation, it was further observed that it is clear that Service Tax is a VAT which in turn is destination based consumption tax, in the sense that it is not commercial activities and not charged on the destination but on the consumer and it would be logical to levy tax on service provided within the country, Service Tax as well as VAT.
4.1 He further relies on the Division Bench ruling of this Tribunal in the case of Viral Builders Vs. Commissioner of Central Excise 2011 (21) STR 457, wherein Viral Builder was the main contractor under the heading Commercial/ Industrial Construction services and have undertaken construction service during the period October, 06 to January, 07 under contracts, of the various projects. Viral Builder paid the Service Tax on such construction services, provided to the user organizations, availing the benefit of a conditional exemption Notification No. 1/2006-Service Tax, which grants exemption from Service Tax in excess of tax calculated on one third of the gross amount charged subject to various conditions enumerated therein. Viral Builder had engaged sub-contractors for carrying out the constructions services provided by Viral Builders under the category of Commercial or Industrial Construction Services. Such sub-contractor also discharged the Service Tax liability availing the benefit of same exemption under Notification No. 1/2006. Viral Builder has filed refund claim of Service Tax on the ground that the said amount of Service Tax was paid by the sub-contractor, which was paid under mistake and the incidence of such tax was borne by Viral Builder and they recovered the tax from Viral Builder and again from sub-contractor, amounts to double recovery and double taxation. The Commissioner (Appeals) in that case rejected the refund on the ground that, there is in general principle that there can be no double taxation in matter of indirect taxation. It was further rejected by the Commissioner (Appeals) that the Viral Builder was at liberty to utilize credit and utilize the same to satisfy the exemption condition of Notification No. 1/2006 and to avail concessional tax on the final services provided by it and the same service for which the contractor had procured an order, does not stand actually provided by it but is passed on to sub-contractor, who provided the actual service. It cannot be said that contractor is liable pay the duty on the same. Service definitely stands provided only once. As such by no stretch of imagination service tax in respect of the same service can be paid for the second time. It is not a case where the service provided by sub-contractor is further used by him for providing services to his buyers (principal). As such, the example of inputs being used in the final product and both leviable to excise duty is not for the purpose of Service Tax. Further, it was noticed that admittedly, the service in the present case was provided by sub-contractor through the main contractor i.e. Viral Builder. It stands clarified by the Board that there cannot be double taxation in cases where services are rendered by a person through another person to the ultimate consumer as long as the main person who has the contract with the customer is paying the Service Tax on the gross amount. Reliance was placed by the Tribunal in the case of Viral Builder on the ruling of the Tribunal in the case of Urvi Construction Vs. Commissioner of Service Tax 2010 (17) STR 302 (Tri-Ahmd), Commissioner of Central Excise, Indore Vs. Shivhare Roadlines 2009 (16) STR 335 (Tri-Del) wherein the law stands clarified and the lower authorities are bound by the same.
4.2 The appellant further relies on the ruling dated 12.10.2006 in the case of Larsen & Toubro Ltd. Vs. State of Andhra Pradesh 2006-TIOL-327-HC-HYD-VAT, wherein it has been held that when a contractor awards either wholly or partially, the contractual obligation to a sub-contractor there is another agreement between the contractor & sub-contractor which is pro tanto identical in nature with the agreement between the employer and the contractor. Therefore, there are two works contracts in existence between the three parties mentioned above for carrying out the one and the same task. It was further noticed by the Hon'ble High Court that there is no agreement between the employer and the sub-contractor and consequently, there is no legal relationship creating either rights or obligations between them under an agreement. In between the employer and the sub-contractor, in view of the Hon'ble High Court, the relationship is simply that the sub-contractor is an agent of the contractor. Under Section 182 of the Indian Contracts act, an agent is defined to be a person employed to do any act for another. Thus, the role of a sub-contractor in the context of the issue under examination is simply that of an agent of the contractor either from the point of the employer or from the point of view of the rest of the world. Though there are two agreements satisfying the definition of a works contract under the VAT Act 4.3 The aforesaid order of the Hon'ble High Court was challenged by the State of Andhra Pradesh before the Hon'ble Supreme Court, wherein at para 17 of the order dated 26.8.2008 reported in 2008-TIOL-158-SC-VAT, the Supreme Court took notice that the issue before it was whether the turnover of the sub-contractor is to be added to the turnover of the main contractor (L&T). In other words, the question which the Court was required to answer was as to whether the goods supplied by the sub-contractor occurred in the form of single deemed sale or multiple deemed sales, The Hon'ble Supreme Court observed that the issue stands clarified in ruling of the Builders Association of India 1989 73 STC 370, wherein it was held that "ordinarily unless there is a contract to the contrary in the case of works contract the property in the goods used for construction passes to the owner of the land on which the building is constructed, when the goods or materials used are incorporated in the building. As per the Revenue, there are two deemed sales, one between the main contractor and contractee and the other between sub-contractor and the main contractor, in the event of the contractee not having any privity of contract with the sub-contractor. The Hon'ble Supreme Court in this ruling held that there is only one sale and only one transaction of the property in the goods and observed as follows:-
19. If one keeps in mind the above quoted observation of this Court in the case of Builders' Association of India (supra) the position becomes clear, namely, that even if there is no privity of contract between the contractee and the sub- contractor, that would not do away the principle of transfer of property by the sub-contractor by employing the same on the property belonging to the contractee. This reasoning is based on the principle of accretion of property in goods. It is subject to the contract to the contrary. Thus, in our view, in such a case the work, executed by a sub-contractor, results in a single transaction and not as multiple transactions. This reasoning is also borne out by Section 4(7) which refers to value of goods at the time of incorporation in the works executed. In our view, if the argument of the Department is to be accepted it would result in plurality of deemed sales which would be contrary to Article 366(29A)(b) of the Constitution as held by the impugned judgment of the High Court. Moreover, it may result in double taxation which may make the said 2005 Act vulnerable to challenge as violative of Articles 14, (1)(g) and 265 of the Constitution of India as held by the High Court in its impugned judgment.
20. Before concluding, we may refer to one more aspect. It appears that after the impugned judgment, the Department has amended Rule 17 of the APVAT Rules, 2005 vide Government Order dated 20.8.2007. The position has been clarified vide Rule 17(1)(c) (as amended). It is now clarified that where a VAT dealer awards any part of the contract to a registered sub-contractor, no tax shall be payable on the consideration paid for the sub-contract. Therefore, in our view, the principle to be adopted in all such cases is that the property in the goods would pass to the owner/contractee on its incorporation in the works executed. This principle finds place in sub-section 7(a) of Section 4 of the said 2005 Act. 4.4 It is further argued by the learned Counsel that service transaction as well as sale transaction is only one sale/service, and therefore, it can be held accordingly that the Service Tax cannot be collected by Revenue from the main contractor and the sub-contractor and, accordingly, he prays to uphold the order of the appellate Commissioner being in accordance with law and not in defiance with the Act and Rules. It is further argued that the Circular cannot override the provisions of the charging section and the restriction provided (as to CENVAT) under Notification No. 1/2006, stated that the denial of credit to be taken by the service provider as the main contractor, of the Service Tax paid by its sub-contractor is against the charging section and accordingly, should be held to be unenforceable in the facts and circumstances.
4.5 The respondent further relies on the ruling dated 18.3.2013 by the Division Bench of this Tribunal in the case of JAC Air Services Pvt. Ltd. Vs. Commissioner of Service Tax, Delhi 2013 (31) STR 155 (Tri-Del) which have considered most of the aforesaid decisions, wherein the facts were in respect of cargo handling services, M/s JAC Air Services was a sub-contractor under agreement with Airport Authority of India for Cargo Handling Services at Delhi International Airport and had rendered cargo handling service. The Service Tax liability was discharged by AAI and the Revenue had held the sub-contractor JAC Air Services also liable to pay the tax as sub-contractor for the second time. It was held that Service Tax cannot be demanded for the second time from the sub-contractor.
5. Having considered the rival contentions, I find that the Notification No. 1/2006-ST is in confrontation with the charging section, Section 66 of the Finance Act, 1994 and accordingly I hold the same is not applicable in the facts and circumstances of the case so far as the condition relating to not taking of CENVAT Credit is concerned of the service tax paid by the sub-contractor. Further, I notice that the finding of fact recorded by the adjudicating authority having not been challenged by any of the parties, and in view of the categorical finding of fact recorded, I hold that the respondent assessee is entitled to refund and accordingly, the appeal of the Revenue is dismissed.
5.1 In view of the ruling of the Hon'ble Apex Court in the case of L&T Ltd. (supra), I hold that opinion of the third member as rendered in the case of Sunil Hi-tech Engineers Ltd. (supra) by this Tribunal is not binding and held per incuriam, as the same is directly in the teeth of the ruling of the Apex Court and is passed without taking notice of the aforementioned ruling of the Hon'ble Supreme Court.
(Dictated and pronounced in Court) (Anil Choudhary) Member (Judicial) Sinha 16