Custom, Excise & Service Tax Tribunal
Dsm Soft Pvt. Ltd vs Commissioner Of Service Tax on 6 November, 2017
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH CHENNAI Appeal No.ST/209/2010 [Arising out of Order-in-Appeal No.02/2010 (MST) dt. 25.1.2010 passed by the Commissioner of Central Excise (Appeals), Chennai] DSM Soft Pvt. Ltd. Appellant Versus Commissioner of Service Tax, Chennai Respondent
Appearance:
Ms.N.Jothi Lakshmi, Advocate (Rep. counsel for Shri S. Sankaravadivelu, Advocate) For the Appellant Shri K.P. Muralidharan, AC (AR) For the Respondent CORAM :
Honble Ms. Sulekha Beevi C.S. Member (Judicial) Honble Shri Madhu Mohan Damodhar, Member (Technical) Date of hearing / decision : 06.11.2017 FINAL ORDER No. 42822 / 2017 Per Bench The appellants herein rendered services in the nature of Consulting Engineering Services to M/s.Technip India Ltd., the main Consultant. Period involved is 10.8.2006 to 10.7.2007. The main consultants were exporting services and did not discharge service tax. As they did not satisfy the requirements of Export of Services Rules 2005, the department demanded tax liability of Rs.3,80,040/- along with interest liability and imposition of penalty under various provisions of law which was confirmed by the original authority. In appeal, Commissioner (Appeals) vide impugned order dt. 25.01.2010 set aside penalties under Section 76 & 78 of the Finance Act, however upheld the remaining portion of the lower authority's order. Hence this appeal.
2. Today, when the matter came up for hearing on behalf of appellant, Ms. N. Jothi Lakshmi, representing counsel for Shri S. Sankaravadivelu, Advocate on record submits that they were guided by Trade Notice No.53/97 dt. 4.7.97 of New Delhi Commissionerate which clarified that in cases services are rendered to the prime consultant the levy of service tax does not fall on the sub-consultant. Ld. Advocate further submits that trade notice was issued based on the TRU Circular No.B.43/5/97-TRU dt. 02.07.97. She also relies on the ratio of the case law in the case of Union of India Vs Nitdip Textile Processors Pvt Ltd. 2011 (273) ELT 321 (SC).
3. On the other hand, Ld. A.R Shri K. P. Muralidharan supports the impugned order.
4. On going through the facts, we find that the ld. Advocate is indeed correct in her assertion that the Trade Notice / CBEC circular did clarify that the services when provided to a prime consultant would not attract service tax during the material. The relevant portion of the TRU circular is reproduced herein under :
Para 4.4 of the Trade Notice No.53/1997dated 04.07.1997 Para 3.4 of the TRU Circular No.B.43/5/97-TRU dated 02.07.1997 The services should be rendered to a client directly, and not in the capacity of sub-consultant, associate consultant to another consulting engineer, who is the prime consultant. In case services are rendered to the prime consultant, the levy of Service Tax does not fall on the sub-consultant but is on the prime or main consulting engineer who raises a bill on his client (which included the charge for services rendered by sub-consultant) The services should be rendered to a client directly, and not in the capacity of sub-consultant, associate consultant to another consulting engineer, who is the prime consultant. In case services are rendered to the prime consultant, the levy of Service Tax does not fall on the sub-consultant but is on the prime or main consulting engineer who raises a bill on his client (which include the charge for services rendered by sub-consultant)
5. In the event, we find that identical situation was analyzed by the Tribunal in the case of Oikos Vs CCE Bangalore - 2007 (5) STR 229 (Tri.-Bang.) wherein it was unequivocally held that appellant therein being a sub-contractor, levy of service tax was not justified. In view of the very same Trade Notice /Board's Circular relied upon in this appeal also, hence without going further into the merits of the matter, we hold in favour of the appellant. Impugned order is therefore set aside and appeal is allowed with consequential benefits, if any , as per law.
(dictated and pronounced in court)
(Madhu Mohan Damodhar) (Sulekha Beevi C.S)
Member (Technical) Member (Judicial)
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Appeal No.ST/209/2010