Custom, Excise & Service Tax Tribunal
M/S. Power Mech Projects Ltd vs Cc, Guntur on 17 August, 2016
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL REGIONAL BENCH AT HYDERABAD Bench DB Court I Appeal No.ST/1840/2012 (Arising out of Order-in-original No.24/2012-S.Tax (Commr.) dt. 30/03/2012 passed by CC,CE&ST, Guntur) For approval and signature: Honble Ms. Sulekha Beevi, C.S., Member(Judicial) Honble Shri Madhu Mohan Damodhar, 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 should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordship wish to see the fair copy of the Order? 4. Whether Order is to be circulated to the Departmental authorities? M/s. Power Mech Projects Ltd. ..Appellant(s) Vs. CC, Guntur ..Respondent(s)
Appearance Shri G. Prahlad, Advocate for the appellant.
Shri P.S. Reddy, Asst. Commissioner(AR) for the respondent.
Coram:
Honble Ms. Sulekha Beevi, C.S., Member(Judicial) Honble Shri Madhu Mohan Damodhar, Member(Technical) Date of Hearing:17/08/2016 Date of decision:17/08/2016 FINAL ORDER No._______________________ [Order per: Sulekha Beevi, C.S.] The appellants are aggrieved by the impugned order which confirmed the following demand, interest and penalty:-
(i) Rs.8,80,590/- (Rupees eight lakhs eighty thousands five hundred and ninety only) being the service tax and the CESSes payable thereon on the Management, Maintenance & Repair Service rendered during the period from 10/2007 to 3/2008. However, Rs.8,80,590/- and amount representing the interest thereon paid on 27/01/2012 was appropriated against the respective demand.
(ii) Rs.2,09,63,859/- (Rupees two crore nine lakhs sixty three thousands eight hundred and fifty nine only) on the Erection, Commissioning and Installation service rendered in the capacity of sub-contractor during the period 4/07 to 3/08 under proviso to Sec. 73(1) of Finance Act, 1994;
(iii) Interest on the amount specified at (ii) above, under the provisions of Section 75 of the Finance Act, 1994;
(iv) Penalty of Rs.1000/- (Rupees one thousand only) under the provisions of Section 77 of the Finance Act, 1994;
(v) Penalty of Rs.2,18,44,449/- (Rupees two crore eighteen lakhs forty four thousands four hundred and forty nine only) under the provisions of Section 78 of the Finance Act, 1994 ibid for willful misstatement and suppression of facts; and
(vi) Penalty of Rs.200/- per day during which such failure continues or at the rate of 2% of such tax, per month, whichever is higher, starting with the first day after the due date till the date of actual payment of the outstanding amount of service tax, under the provisions of Section 76 of the Finance Act, 1994.
2. It is submitted by Shri G. Prahlad the learned counsel appearing for appellant that the demand of Rs.8,80,590/- was confirmed, being the service tax payable on Management, Maintenance and Repair (MMR) service for the period 10/2007 to 3/2008. He pointed out that the appellant had discharged the entire service tax liability under MMR service along with interest prior to issuance of show-cause notice and hence as per Section 73(3) of the Finance Act, 1994, no show-cause notice ought to have been issued. Further that for the same reason no penalty is imposable. The learned counsel placed reliance on the decisions laid in C Ahead Info Technologies India Pvt. Ltd. Vs. CCE(A), Bangalore-II [2009(14) STR 803 (Tri. Bang.)] which was upheld by Honble High Court of Karnataka vide case reported in 2012(26) STR J25(Kar.)]. That similar view was taken by the same High Court in the case of CCE & ST, LTU, Bangalore Vs. Adecco Flexione Workforce Solutions Ltd. [2012(26) STR 3 (Kar.)].
3. The second demand is Rs.2,09,63,859/- in respect of ECIS rendered by appellant. The appellant challenges this demand raising the ground that the main contractor has discharged the service tax liability for these services rendered to the client and appellant being a sub-contractor cannot be called upon to pay service tax for rendering the very same service. The learned counsel relied upon the decisions in Visesh Engineering Co. Vs. CCE [2016(43) STR 232 (Tri. Hyderabad), Nana Lal Suthar Vs. CCE [2015-TIOL-2357-CESTAT-DEL] and the order passed by this Bench in the case of S.V. Engineering, appeal No.ST/954/2012 decided on 04/08/2016.
4. The learned AR Shri P.S. Reddy reiterated the findings in the impugned order.
5. We are convinced and satisfied with the arguments put forward by the counsel appearing for the appellants to conclude that the demand of service tax for ECIS services is not sustainable as the main contractor has discharged the service tax liability. So also as the appellant had paid service tax in regard to MMR services before issuing the show-cause notice, no penalty can be imposed in this regard. Cumulatively, all penalties imposed in the impugned order are unsustainable and liable to be set aside, which we hereby do. The demand and interest of service tax on ECIS is set aside for the reason that the main contractor has discharged the liability.
6. In the result, the impugned order is modified to the extent of setting aside the demand of service tax and interest in respect of ECIS and also by setting aside all penalties imposed in the impugned order.
7. In the result, the appeal is partly allowed in above terms with consequential reliefs, if any.
(Operative part of this order was pronounced in court on conclusion of the hearing) MADHU MOHAN DAMODHAR MEMBER(TECHNICAL) SULEKHA BEEVI C.S. MEMBER(JUDICIAL) Raja.
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