Custom, Excise & Service Tax Tribunal
Lone Star Engineers vs Cce, Panchkula on 13 July, 2016
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL SCO 147-148, SECTOR 17-C, CHANDIGARH 160 017 COURT NO. I APPEAL NO. ST/50026/2015 [Arising out of Order-in-Original No. 15/2014 dated 26.09.2014 passed by the Commissioner of Central Excise, Panchkula] Date of hearing/decision: 13.07.2016 For approval and signature: Honble Mr. Ashok Jindal, Member (Judicial) Honble Mr. Venkitkrishnan Padmanabhan, Member (Technical) 1. Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2. Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? No 3. Whether their Lordships wish to see the fair copy of the order? Seen 4. Whether order is to be circulated to the Department Authorities? Yes Lone Star Engineers : Appellant VS CCE, Panchkula : Respondent
Appearance Sh. Jagmohan Bansal, Advocate- for the Appellant Sh. Satya Pal, AR- for the Respondent CORAM:
Honble Mr. Ashok Jindal, Member (Judicial) Honble Mr. V. Padmanabhan, Member (Technical) Final Order No. 60937/2016 Per: Ashok Jindal This appeal filed by the appellant against the impugned order confirming the demand of service tax of Rs. 1,39,22,109/- alongwith interest and various penalties imposed on the Finance Act, 1994 for the period of 2006 to 2012.
2. The facts of the case are that the appellant has entered into a sub-contract with M/s G.S Atwal (GSA) for overburden removal/coal excavation, including drilling, blasting, loading, transportation and dozing in the dumping area, or unloading coal into crushing hopper at a distance of not more than 3 km from the edge of the query by using mechanical equipment and not manually as per directives of GSA. The appellant mentioned the nature of work as hiring of equipment for excavation, loading of Coal/OB at Pit No. of Dongamouha Open Case Coal mines of M/s Jindal Steel Power Projects Ltd. (JSPL) and transportation the same to JSPLs crushing plant/OB Dump within distance of 3 km from the edge of the quarry and unloading of coal in the JSPLs hopper as would be directed by GSA. The Revenue came to know that the appellant is providing Site Formation Service and Mining services since 2007-2008 without paying service tax. Accordingly, proceedings were initiated by issue summons and asking records from the appellant. The appellant explained the reasons for difference in figures of balance sheet & figures of ST-3 returns that as a sub-contractor, they provided transportation services to M/s GSA and Mining Services to M/s JSPL and paying service tax on mining service only which is reflected in their ST-3 returns and no service tax has been paid on transportation charges as these transportation charges were included in the value of service provided by GSA and they have paid service on that, therefore, they have not paid service tax on those transportation charges. The case of the Revenue is that as the appellant was engaged in the activity of site formation service and mining service, therefore, they are liable to pay service tax on those categories and for the period prior to 27.07.2009 when the maintenance & repair of roads was exempted, therefore, for the prior period they liable to pay service tax. In this set of facts, the show cause notice was issued to the appellant to demand service tax from the appellant along with interest and to impose various penalties on the appellant. The matter was adjudicated demand of service was confirmed along with interest and various penalties are also imposed. Aggrieved from the said order, the appellant is before us.
3. Sh. Jagmohan Bansal appeared on behalf of the appellant and submits that admittedly the appellant has not paid service tax on their activity being sub-contractor but on behalf of the appellant , the main contractor discharge service liability, therefore, the same can be considered as payment of service tax by the appellant and demand of service tax is not sustainable confirmed by way of impugned order in the light of the decision of the Honble Larger Bench of this Tribunal in the case of Vijay Sharma & Co. reported in 2010 (20) STR 309 (Tri. LB), he also relied on the decision of M/s Hindustan Coca Cola Beverage P. Ltd. reported in 2007 AIR (SC) 2930. He further submitted that the maintenance & repair of road have been exempted from service tax as per section 97 of the Finance Act, 2012 w.e.f. from 16.06.2005, therefore, they are not liable to pay service tax for maintenance & repair roads. He further submitted that for the remaining liability of service tax, the appellant has already paid service tax but the same has not been examined/ verified by the adjudicating authority. In that circumstances, the matter may be remanded back to the adjudicated authority to ascertain fact of payment of service tax by the appellant.
4. On the other hand, the ld. AR opposed the contention of the Ld. Counsel and submits that the appellant has provided service, therefore, the appellant is liable to pay service tax, therefore, also for payment of service tax for maintenance and repair of roads, he relied on the impugned order.
5. Heard the parties and considered the submissions.
6. On careful consideration of the submissions made by both the sides and peruse the records, we find that the appellant is engaged in the activity of site formation service and mining service. We also find that the appellant is liable to pay service tax but on the activity of appellant, the main contractor has paid service on behalf of the appellant. We further find that the issue whether payment made by the main contractor can be considered payment on behalf of the appellant had came up before this Tribunal in the case of Vijay Sharma & Co. (Supra) has observed as under:-
10. In all the three references before us, it would be proper to send the matter back to the original authority, without being sent to the concerned benches, to verify as to whether the stock brokers have paid service tax on behalf of the sub-brokers and if so, reduce the demand of sub-brokers to that extent and pass fresh orders, granting fair opportunity of hearing to the sub-brokers. All the appeals are allowed by way of remand.
7. Further, we find that in the case of Hindustan Coca cola Beverage P. Ltd. (Supra ) in the case of income tax wherein the office incharge was required to deduct TDS from the payments made to the deductee/assessee and the deductor failed to deduct the TDS but the deductee/assessee paid the income tax. In that circumstances, the Honble Apex Court has observes as under:-
10. Be that as it may, the Ciruclar No. 275/201/95-IT(B), dated 29.01.1997 issued by the Central Board of Direct Taxes, in our considered opinion, should put an end to the controversy. The circular declares no demand visualized under section 201(1) of the Income Tax Act should be enforced after the tax deductor has satisfied the officer-in-charge of TDS, that taxes due have been paid by the deductee-assessee. However, this will not alter the liability to charge interest under section 201 (1A) of the Act till the date of payment of taxes by the deductee assessee or the liability for penalty under section 271C of the Income Tax Act.
8. Relying on the above cited decisions, we hold that the payment made by main contractor on the activity conducted by the appellant is considered as discharge of service tax liability by the appellant. Further we find that the payment made by the main contractor has not been disputed by Revenue. In that circumstances, we hold that the payment of main contractor on behalf of the appellant shall be treated as payment made by the appellant.
9. We further hold that in the light of the Section 97 of the Finance Act, 2012, the appellant is not liable to pay service tax on the activity of maintenance & repair roads, therefore, demand on this account is also set aside.
10. The matter is remanded back to the adjudicated authority for verification purposes whether the appellant paid service tax for the remaining part of the services tax demand. If the same is found to correct, no demand shall be sustainable against the appellant.
11. We make it clear that the adjudicating authority shall given an opportunity to produce all the documents for verification purposes and thereafter the adjudicating authority shall pass an appropriate order in accordance with law.
The appeal is disposed off in the above terms.
(Dictated and Pronounced in the open court)
V. Padmanabhan Ashok Jindal
Member (Technical) Member (Judicial)
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