Custom, Excise & Service Tax Tribunal
Gurudev Dyestuff India Pvt Ltd vs Cgst & Central Excise Ahmedabad South on 27 September, 2024
Customs, Excise & Service Tax Appellate Tribunal
West Zonal Bench at Ahmedabad
REGIONAL BENCH-COURT NO. 3
Service Tax Appeal No. 10868 of 2017 - DB
(Arising out of AHM-SVTAX-000-APP-226-16-17 dated 20/02/2017 passed by Commissioner
( Appeals ) Commissioner of Central Excise, Customs and Service Tax-SERVICE TAX -
AHMEDABAD)
Gurudev Dyestuff India Pvt Ltd ........Appellant
Plot No. 541, Phase-ii,
GidcVatva,
AHMEDABAD,GUJARAT
VERSUS
PRINCIPAL COMMISSIONER, CGST, ......Respondent
CUSTOMS & CENTRAL EXCISE - CGST & Central Excise Ahmedabad South 7th Floor, GST Bhawan, Near Polytechnic, Ambawadi, Ahmedabad-380015, Gujarat APPEARANCE:
Shri Amber Kumrawat, Advocate, Appeared for the Appellant Shri Himanshu P Shrimali, Superintendent (AR) Appeared for the Respondent CORAM: HON'BLE MEMBER (JUDICIAL), MR. RAMESH NAIR HON'BLE MEMBER (TECHNICAL), MR. C L MAHAR Final Order No.12233/2024 DATE OF HEARING: 16.07.2024 DATE OF DECISION: 27.09.2024 RAMESH NAIR The appellant are engaged in the manufacturing of DASA falling under Chapter Heading 32 of the First Schedule to the Central Excise Tariff Act, 1985 and also holding Central Excise registration. The appellant are also holding service tax registration. The appellant had received services of Manpower Recruitment or Supply Agency Service from M/s Kalpataru Job Management during the period 01.07.2012 to 31.12.2014. As per Notification No.30/2012-ST dated 20.06.2012 the appellant is required to pay 75% of the service tax payable on the value of Manpower Supply Agency Service as a recipient of service under reverse charge mechanism. However during the relevant period the service provider M/s. Kalpataru Job Management has paid service tax on the entire 100%value of Man Power Supply Agency Service. The case of the department is that since the
2 ST/10868/2017-DB appellant is liable to pay 75% of the service tax on the Man Power Agency Service as a recipient of service under reverse charge mechanism, demand of service tax was confirmed.
2. Shri Amber Kumrawat, Learned Counsel appearing on behalf of the appellant at the outset submits that eventhough, the appellant during the relevant period is liable to pay 75% of the service tax under reverse charge mechanism but the entire service tax has been paid by the service provider M/s. Kalpataru Job Management and for which the invoice was raised by the service provider showing 100% payment of service tax. Therefore, the service tax cannot be demanded twice from the appellant. This issue has been considered in the various following judgments:-
CST, Meerut-ll v Geeta Industries Pvt. Ltd. 2011 (22) STR 293 (Tri.- Del) Angiplast Pvt. Ltd. v CST, Ahmedabad 2013 (32) STR 628 (Tri.- Ahmd) Navyug Alloys Pvt. Ltd. v CCE &Cus 2009 (13) STR 421 (Tri.-Ahmd) Umasons Auto Compo Pvt. Ltd. v CCE, Aurangabad 2016 (46) STR 405 (Tri-Mum) Mandev Tubes v CCE, Vapi 2009 (16) STR 724 (Tri.-Ahmd) Invincible Security Services v CCE, Noida 2009 (13) STR 185 (Tri.-Del) Hindustan Coca Cola Beverages Pvt. Ltd v CIT 2007- TIOL-144-SC-IT He further submits that the appellant were being audited by the service tax authorities from time to time. Therefore there cannot be any suppression of fact on part of the appellant and extended period is not invokable.
Therefore, the demand is also hit by limitation.
3. Shri Himanshu P Shrimali, Learned Superintendent (AR) appearing on behalf of the Revenue, reiterates the findings of the impugned order.
4. We have carefully considered the submissions made by both the sides and perused the records. We find that eventhough as per the statutory provision, the appellant being a service recipient is required to pay 75% of service tax under reverse charge mechanism in respect of Man Power Supply Agency Service, however undisputed fact is that 100% service tax was discharged by the service provider M/s. Kalpataru Job Management which is reflected in the invoice of the service provider. Therefore, in this position the service tax once again cannot be demanded from the appellant otherwise it 3 ST/10868/2017-DB will amount to recovery of the applicable service tax twice which is not permissible in law. This issue has been considered time and again. In the case of Samsung India Electronics Pvt. Ltd vs CCE 2024(4) TMI 225-CESTAT, this Tribunal passed the following order:-
"4.1 We have considered the impugned orders along with the submissions made in appeal and during the course of argument.
4.2 It is a case of the appellant that they had been paying the service tax in respect of all the services received to the provider of service tax, who has inter-deposited the service tax. Taking note of the above contention Commissioner (Appeals) in the impugned order has observed as follows:-
"Further the case laws quoted by the appellant are not relevant to the facts of the case. It was also contended that since service provider had paid tax the tax cannot be demanded from the appellant. In this regard, I find that for any excess payment of tax by the service provider, option of Refund was always open but tax paid by him cannot be adjusted against the liabilities of the Appellant."
From the above observations it is evident that the fact of payment of service tax under forward charge by the service provider is not in dispute.
4.3 It is observed that the facts of the payment of service tax by the appellant to the service provider is well established by the invoices which has been produced before us and were also produced before the Original Adjudicating Authority. Some sample invoices are reproduced bellow for further reference : -
4 ST/10868/2017-DB 5 ST/10868/2017-DB 4.4 On perusal of these invoices it is evident that the service provider is a registered service provider, registered with the department and has issued the invoices to the appellant indicating the amount of service tax, educations cess and higher education-
cess. In the education guide issued by the revenue following has been stated :
"10.1.2 What does a service provider need to indicate on the invoice when he is liable to pay only a part of the liability under the partial reverse charge mechanism?
The service provider shall issue an invoice complying with Rule 4A of the Service Tax Rules 1994. Thus the invoice shall indicate the name, address and the registration number of the service provider; the name and address of the person receiving taxable service; the description and value of taxable service provided or agreed to be provided; and the service tax payable thereon. As per clause (iv) of sub-rule (1) of the said rule 4A „the service tax payable thereon‟ has to be indicated. The service tax payable would include service tax payable by the service provider."
4.5 Appellant, while making the payment have made the entire tax amount indicated in the invoices undisputedly. Further on the invoices the services provided are indicated as "cleaning services, Assembling services etc. These services are not the services specified in the notification No 30/2012-ST and thus are not the services on which the appellant was required to discharge the tax liability under partial reverse charge mechanism. The service provider who is also registered with the Department was required to discharge the service tax liability under these category. We are of the view that invoice show the complete transactions, service tax liability has been correctly discharged in the manner as prescribed under law. It is settled law that classification of service from one category to another category could not have been altered at the end of recipient of service to demand service tax under some other 6 ST/10868/2017-DB category of taxable service. In case Bharat Hotels Ltd [2017 (50) S.T.R. 165 (Tri. - Del.)] Delhi bench has held as follows:
"6. We note that the service tax for the input service has been discharged by the provider under the „cleaning service‟ which is not the listed service. We also note that the recipient of service is taking credit on such tax paid to the Government and it is not open to the recipient to reclassify the service when the tax has been paid already under a particular category by the provider of service. Neither the appellant nor the officers in the jurisdiction of the appellant have legal sanction to revise classification of service received, even if the said classification is thought to be made incorrectly by the provider of service. The correct course will be to get the classification corrected with valid basis at the source and to get the documents to that effect. We note that the invoices issued by the provider of service indicate that service tax registration under „cleaning service‟ though the description of service in the body of the invoice is indicated as „marble maintenance‟. As mentioned above, the classification and categorization of service cannot be changed at the end of the recipient.
In case of Pacific Exports [2013 (13) STR 41 (T-Ahmd)] Ahmedabad bench has held as follows:
"3.....Further, what is required to be examined is as to whether service tax was paid under the category of Port services and not under the relevant head, or not. It is a settled law that re-classification of the services cannot be done at the recipient's end......"
4.6 Reverse charge mechanism under Service Tax was introduced w.e.f 01-01-2005 vide Notification No. 36/2004-ST and with effect from 01-07-2012 a new mechanism of reverse charge (RCM) and partial reverse charge or we can call it joint charge (PRCM/JCM) was introduced vide Notification No. 30/2012-ST which was further amended by Notification No. 45/2012-ST, 10/2014-ST and 7/2015-ST. Power was drawn from Section 68(2) of Finance Act, 1994, to mainly ensure more tax compliance as it was difficult to collect service tax from various unorganized sectors. In any case this is not for charging taxes twice on the same transaction. Board has circular No 51/13/2002-ST dated 07.01.2003 clarified as follows:
"2. The matter has been examined in the Board. It is hereby clarified that any service (transaction) can be taxed only once, even if it appears to fall under two or more categories. Therefore, before levying service tax it is essential to determine under which category a particular service falls. It should be kept in mind that service tax is a tax on the service provided and is recovered from the service provider (in some cases even from the service recipient). The position is akin to Central Excise duty which is charged on manufactured goods. Just as Central Excise duty cannot be charged twice on the same goods under two separate chapters/headings/sub-headings of the Central Excise Tariff, so also Service tax cannot be charged twice on the same service (transactions). However, one service provider may provide more than one taxable service. In such cases, the service provider need only take one registration, but it shall be endorsed for all the taxable services and tax liability will have to be discharged for each of the taxable services separately."
4.7 Following decisions relied upon by the appellant also support the contention of the appellant that once the service tax has been paid on a transaction the same could not have been demanded by classifying the same transaction under some other category.
Zyeta Interiors Pvt Ltd. [2022 (58) GSTL 151 (Kar)] "4. Having heard the Learned Counsel for the parties and having perused the Petition Papers, this Court is inclined to grant a limited indulgence in the matter as under and for the following reasons :
(a) ......
7 ST/10868/2017-DB
(b) There is also some force in the contention of the assessee that the entire amount due by way of tax having already reached the Exchequer, the assessee could not have been called to make the payment once over; petitioners had availed manpower services and in terms of Section 68(2) of the Finance Act, 1994, 50% of the tax due was paid by the assessee and the remaining 50% was remitted by the service provider; however, w.e.f. 20-6- 2012 vide Notification No. 30/2012-S.T., this ratio was altered to 75:25 upto 1-4-2015 between the consumer & the service provider; further, it was changed to 100% qua the consumer w.e.f. 1-4-2015; however, inadvertently, the Assessee continued to pay 50% and the service provider paid the remaining 50%; thus, whatever is due to ceaser has reached his hands, is true; in fact, the C.B.E. & C. vide Circular No. 341/18/2004 had clarified that the reverse charge mechanism should not lead to double taxation; in other words, once the tax liability is discharged regardless of the persons who discharge, the assessee cannot be asked to pay the tax again."
Speed and Safe Courier Service [2010 (18) STR 550 (Ker) ] ".....In terms of Section 67, the entire amount collected from the customers for rendering courier service is subject to tax at the hands of agent/franchisee. In our view, if a service falls under two heads, there is no provision in the Finance Act, 1994 to tax the very same service charges twice under two heads. In this case, what was done is double assessment on part of the service charges collected, for rendering courier service at the hands of the appellant...."
Geeta Industries P Ltd [2011 (22) STR 293 (T-Del)] "4. There is no dispute that service in question has suffered tax. The only dispute is the person who shall pay the service tax. When the treasury has not been affected by virtue of collection of service tax from the service provider as is the case of the Revenue and there is no legal infirmity in the decision of the learned Commissioner (Appeals) there cannot be double taxation of same service. But it is fact that realization of the service tax has been made from the service provider while the recipient of service of GTA has liability under the law. Finding no loss of revenue, as has been held by the learned Commissioner (Appeals), Revenue‟s appeal is dismissed."
Aadarsh Sri Sai Manpower Solution (P ) Ltd [2023-TIOL-732-CESTAT-Del] "10. The aforesaid decision of the Karnataka High Court in Zyeta Interiors emphasises that where the government received the entire amount of tax an assessee cannot be called upon to make payment even if it had deposited some portion of the tax dues and the remaining portion was deposited by the service provider. The Karnataka High Court also observed that once the tax liability has been discharged, regardless of the person who has discharged, an assessee cannot be asked to pay the tax again.
11. The Tribunal in Reliance Securities Ltd. vs. Commissioner of Service Tax, Mumbai-II 2019 (20) G.S.T.L. 265 (Tri.-Mumbai) = 2018-TIOL-1291-CESTAT- MUM , Angiplast Pvt. Ltd. vs. Commissioner of Service Tax, Ahmedabad 2013 (32) S.T.R. 628 (Tri.- Ahmd.) = 2013-TIOL-785-CESTAT-AHM, India Gateway Terminal (P) Ltd. vs. Commissioner of C. Ex., Cochin 2010 (20) S.T.R. 338 (Tri.-Bang.) = 2010-TIOL-1265-CESTAT-BANG and Commissioner of Service Tax, Meerut-II vs. Geeta Industries P. Ltd. 2011 (22) S.T.R. 293 (Tri.-Del.) made the same observations.
12. In this view of the matter, when the entire tax due has been deposited in the account of the Central Government though not entirely by the appellant as a service provider but also by the service recipients, it will not be possible to sustain the demand.
13. The penalties could also not, for this reason, be imposed upon the directors of the appellant."
8 ST/10868/2017-DB 4.8 Accordingly, we do not find any merits in the demand made by the impugned order and the same is set aside. As the demand has been set aside so is the penalty imposed.
5.1 Appeal is allowed."
In the case of Kerala Ceramics Ltd vs CCE 2024 (5) TMI 868 the Divisional Bench of CESTAT Bangalore passed the following order:-
"6. We find that as per the letter furnished by M/s. Devi Transporters, they have certified that they have not availed any credit under Cenvat Credit Rules for providing the Goods Transport Service to the appellant and no deduction is claimed for cost of goods used in the rendering services. Similarly as evidenced from letter issued by M/s. Ayoob& Co., they also have not availed any Cenvat Credit and no deduction was claimed for cost of goods used in rendering the services.
7. We find that the claim of the appellant is that once the transporter had paid some amount of service tax, it can be adjusted towards the tax liability of the appellant. The issue was considered by the Tribunal in the matter Navyug Alloys Pvt. Ltd. Vs. Commr. ofC.Ex. &Cus., Vadodara-II 2009 (13) S.T.R.421 (Tri.-Ahmd.), where on similar facts and circumstances, the Tribunal held that once tax is already paid on the service, it is not open to the department to confirm the same against the appellant. Similarly in the matter of M/s. Agniplast Pvt. Ltd., 2013 (32) S.T.R.628 (Tri.-Ahmd.) where it is held that:-
8. On perusal of the records, I find that there is no dispute that the amount of Service Tax liability which is contested before the Bench is in respect of the services rendered by M/s. NaranjiPeraj Transport Co., M/s. PathikRoadlines and Transport Corporation of India Ltd. On perusal of the certificates issued by these transport companies, as annexed page Nos. 36, 37 & 38, I find that these transporters have categorically stated that the Service Tax liability for the invoices raised on the appellant has been discharged by them and they had also mentioned their Service Tax registration number and PAN number in their certificates. As against such documentary evidences, the first appellate authority's findings as to no authentic documentary evidence has been produced, seems to be incorrect. Since the certificates clearly indicate the Service Tax registration number, the least that could have been expected from the Revenue, was to call for the details from the concerned jurisdictional Service Tax authorities. Having not done, the lower authorities cannot shift the entire blame on the appellants for having not produced any authentic documentary evidence.
9. I find that the decision of this Bench in the cases Navyug Alloys Pvt. Ltd. (supra), Mandev Tubes (supra) and Geeta Industries Pvt. Ltd. (supra) will squarely cover the issue in favour of the assessee. I also find that CBEC vide Circular dated 17-12-2004, specifically in para 5.7 stated that; "If Service Tax due on transportation of a consignment has been paid or is payable by a person liable to pay Service Tax, Service Tax should not be charged for the same amount from any other person, to avoid double taxation."
8. Considering the facts and circumstances of the case, and the decisions of the Tribunal the appeal is allowed with consequential relief, if any in accordance with law."
The identical issue has also been considered by Hon'ble Karnataka High Court in the case of Zyeta Interiors Pvt. Ltd (supra) wherein, the Hon'ble Court has held as under:-
9 ST/10868/2017-DB "4. Having heard the learned counsel for the parties and having perused the Petition Papers, this Court is inclined to grant a limited indulgence in the matter as under and for the following reasons:
(a) On the receipt of information as to evasion of payment of service tax, investigations were carried out resulting into issuance of a Show Cause Notice dated 28.08.2018 to the first petitioner, covering the period between 01.10.2012 & 30.06.2017; petitioners moved an application dated 03.06.2019 before the Settlement Commission; since several issues were involved, the Commission directed a joint sitting of the Assessee& the Departmental Representative; there is force in the vehement contention of learned counsel for the Assessee that the Assessee has made a full & true disclosure as is forthcoming at paragraph No. 6.18 of the impugned order arguably warranting dropping of punitive proceedings especially when the Assessee has already paid ₹ 2.88 Crore.
(b) There is also some force in the contention of the Assessee that the entire amount due by way of tax having already reached the Exchequer, the Assessee could not have been called to make the payment once over; petitioners had availed manpower services and in terms of Section 68(2) of the Finance Act, 1994, 50% of the tax due was paid by the Assessee and the remaining 50% was remitted by the service provider; however, w.e.f. 20.06.2012 vide 30/2012-ST, this ratio was altered to 75:25 upto 01.04.2015 between the consumer & the service provider; further, it was changed to 100% qua the consumer w.e.f. 01.04.2015; however, inadvertently, the Assessee continued to pay 50% and the service provider paid the remaining 50%; thus, whatever is due to ceaser has reached his hands, is true; in fact, the CBEC vide Circular No. 341/18/2004 had clarified that the reverse charge mechanism should not lead to double taxation; in other words, once the tax liability is discharged regardless of the persons who discharge, the Assessee cannot be asked to pay the tax again.
c) Statutory provisions relating to Settlement Commission came to be inserted to the Statute Book by the Finance (No.2) Act, 1998 w.e.f. 01.08.1998; Sections 31 to 32PA of the Central Excise Act, 1944 and Sections 127A to 127N in the Customs Act, 1962 relate to Settlement Commission; the same has been extended to the realm of service tax w.e.f. 28.05.2012; the object of the Settlement Machinery is to provide reprieve if not relief to the tax evaders so that, tax dues are settled by way of speedy settlement; in Krishnan Vs. Settlement Commission 1989(180) ITR 585 (KAR) it is observed that the Settlement Commission was to be constituted for settling complicated claims of chronic tax evaders as an extraordinary measure, for giving an opportunity to such persons to make a true confession and to have matters settled once for all and earn peace of mind; the Settlement Commission has to keep in mind the recommendation of The Wanchoo Committee that if the tax payer takes the initiative and voluntarily discloses the facts of his alleged deviations to their full extent, he should not be subjected to criminal proceedings and that pecuniary settlement should put the matter to rest.
d) The CBEC Circular has the following relevant part:
"If service tax due on transportation of a consignment has been paid or is payable by a person liable to pay service tax, service tax should not be charged for the same amount from any other person, to avoid double taxation..."
The High Courts of Bombay, Gujrat and Punjab & Haryana have taken the view that when the duty paid character and receipt are not in doubt, the credit cannot be denied relying upon procedural rules: CCE Vs. GujrathSteelco Ltd., 2010 (255) ELT 518
- Guj: CCE Vs. SL Cropack Ltd. (2015) 57 Taxmann.com 52-BOM: CCE Vs. Ralson Ltd., (2007) 6 STT 134; When there was no dispute as to receipt of the inputs/services or the genuineness of the claim, the Settlement Commission could not have refused to admit the photostat copies of the documents; petitioners are ready & willing to produce the originals of the invoices and therefore, the matter requires remittance for fresh consideration.
10 ST/10868/2017-DB In the above circumstances, this writ petition succeeds in part; a Writ of Certiorari issues quashing the impugned part of the orders; matter is remitted to the Settlement Commission for consideration afresh, in accordance with law and after notice to the stakeholders.
All contentions are kept open.
Costs made easy."
In the case of Lohagiri Industries Pvt. Ltd, Bangalore Bench of this Tribunal dealing with the identical issue held as under:-
"4. Learned counsel for the appellant submitted that the impugned order is not sustainable in law as the same has been passed without considering the factual and legal position. He further submitted that the appellant received the security services from various security agencies and was required to pay 75% of the service tax under "Reverse Charge Mechanism". He further submitted that the appellants have paid 75% of the service tax amount to the service provider and in turn, service provider have paid service tax to the Government Account, since the appellant was not registered with the Service Tax Department under the category of Security Services. In support of this submission, he has produced the copy of the Challan, ST-3 Returns and the letters of service provider. He further submitted that the demand of Service Tax again from the service receiver is bad in law and is liable to be set aside. He further submitted that once the entire service tax has been paid by the service provider, then demanding service tax from the appellant would amount to double taxation, which is not permitted under law. In support of his submission, he relied upon the following decisions:
Angiplast Pvt. Ltd. vs. CST: 2013 (32) STR 628 (Tri.-Ahmd.) CST vs. Geeta Industries Pvt. Ltd.: 2011 (22) STR 293 (Tri.-Del.) Navyug Alloys Pvt. Ltd. vs. CCE: 2009 (13) STR 421 (Tri.-Ahmd.) Umasons Auto Compo Pvt. Ltd. vs. CCE: 2017 (47) STR 377 (Tri.-Mum.) Mandev Tubes vs. CCE: 2009 (16) STR 724 (Tri.-Ahmd.)
5. On the other hand, the learned AR reiterated the findings of the impugned order.
6. After considering the submissions of both the parties and perusal of the decisions cited by the appellant, I am of the opinion that once the entire service tax has been paid by the service provider and the appellant has paid the share of 75% of the service tax to the service provider, there remains no tax due to the Government. Further, I find that the decisions relied upon by the appellant are squarely applicable in the present case and therefore, by following the ratio of the above said decision, I am of the view that the impugned order is not sustainable in law and the same is set aside by allowing the appeal of the appellant."
In view of the above judgments and other judgments cited by the Learned Counsel issue is settled that once 100% service tax was discharged the same cannot be recovered twice from any other person.
5. Accordingly, in the present case also since the 100% service tax was discharged by the service provider the same service tax cannot be recovered from the appellant. Hence, the impugned order is set aside and appeal is allowed.
(Pronounced in the open court on 27.09.2024) (RAMESH NAIR) MEMBER (JUDICIAL) (C L MAHAR) MEMBER (TECHNICAL) Bharvi