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Central Excise Bhavan, Race Course Ring Road...Income Tax Office, Rajkot, Gujarat-360001 Appearance:

Shri Hardik Modh, Advocate, Advocate for the Appellant Shri Rajesh Nathan, Assistant Commissioner (AR) for the Respondent CORAM: HON'BLE MEMBER (JUDICIAL), MR. RAMESH NAIR HON'BLE MEMBER (TECHNICAL), MR. C L MAHAR Final Order No._11385/2024 DATE OF HEARING: 20/02/2024 DATE OF DECISION:19.06.2024 RAMESH NAIR The brief facts of the case are that based on the data received from the Income Tax department for the period 2014-15, 2015-16 and 2016-17, the service tax department initiated inquiry to ascertain whether the Appellant discharged liability of service tax on the alleged services provided to M/s. Echjay Industries Pvt Ltd. Based on the data available, it was alleged that the Appellant neither obtained registration for service tax nor filed periodical returns under the provisions of Finance Act, 1994. Based on the data available from the Income Tax Department a Show Cause Notice was issued to the appellant on 28.09.2020 whereby it was alleged that the appellant provided business auxiliary service for which the appellant was liable to pay service tax of Rs. 1,29,31,628/- for the period from 2014-15 to 2016-17. The show cause notice also proposed for demanding interest and penalties. The appellant filed reply to the show cause notice whereby the appellant submitted all the documents in support of their submissions that the appellant was not liable to pay service tax. Thereafter, the appellant filed detailed reply on 04.08.2021 whereby it was submitted as under :-

(i) Krishna Construction Vs. CST, Bhavnagar - 200 (8) TMI 644 - CESTAT, Ahmedabad

(ii) Forward Resources Pvt. Ltd. Vs. CCE, Surat-I - 2022 (7) TMI 716.

2.1 He further submits that as per the fact that the appellant has provided not the business auxiliary service but Manpower Supply Service therefore as per Notification No. 30/2012 - ST the recipient of service is liable to pay service tax on Manpower Supply Service on RCM if the same is provided to business entity. Prior to April 2015 the liability on the service provider was 25% on the service value which has been made zero with effect from 2015-2016. However, the recipient of service has stated that the service tax on the entire activity provided by the appellant has been paid by Echjay, for this reason also service tax cannot be recovered twice form the appellant.

2.2 He further submits that the Learned Commissioner (Appeals) decided the matter on the ground that even though the service tax was paid by the recipient of service the appellant is still liable to pay the service tax under business auxiliary service. He submits that this finding of Commissioner (Appeals) is contrary to the larger bench judgment. He submits that Learned Commissioner (Appeals) held that none of the Labour was on payroll of the appellant. All the labourers were on the payroll of M/ss. Echjay Industries Pvt Ltd and therefore services provided by the appellant did not fall under the category of Manpower Supply Service. He submits that the said finding is contrary to the facts of the case in as much as employee provident fund was collected and deposited by the appellant with the provident fund department. As regard billing, based on number of labour provided by the appellant raised invoices for supply of labourers and collected the amount towards wages, ESIC, PF Contribution and bonus etc. This clearly shows that the appellant had provided Manpower Supply Service. He also referred to the letter dated 13.09.2021 issued by M/s. Echjay Industries Pvt Ltd whereby the service recipient specified that the Appellant did not provide any legal consultancy services where the company paid requisite amount of service tax under RCM. He submits that Learned Commissioner (Appeals) erred in holding that it is not ascertainable from ST -3 returns of EIPL furnished by the appellant that whether the service tax paid by EIPL towards the services of appellant or not. He submits that the Annexure to the ST-3 return from period October 2014 to March 2017, it can be seen that the amount charged by the appellant through different invoices for reimbursement of expenses and fees charges EIPL paid service tax under RCM. He also referred to a Chartered Accountant Certificate wherein it was certified that M/s. EILP paid service tax under the category of Manpower Recruitment Agency Service. He also submits that the contention of the Learned Commissioner (Appeals) with regard to the deduction of TDS is also self-contradictory. He further submits that the departmental audit of EIPL was conducted by the service tax authority and the service tax paid under the category of Manpower Supply Service was duly accepted by the revenue without any demur. Hence, the dispute regarding classification ought not to have been raised in the hands of provider of service.

4.2 We further find that the appellant have strongly claimed that in respect of service provided by them the service recipient M/s. Echjay industries Pvt Ltd has paid the service tax. In this regard they have submitted a certificate not only from the service recipient M/s EIPL but also from the Chartered Accountant. It is observed that both the lower authorities have discarded this claim of the appellant without properly verifying the fact. The learned Commissioner (Appeals) discarded the claim of payment of service tax by service recipient on the ground that the same is not appearing in the ST -3 returns of EIPL. It is obvious that the detail of the parties for whose transaction the service tax is paid does not reflect in ST- 3 returns. However, this can be ascertained from the back documents such as books of account, parties ledger etc. The lower authorities have not taken any pain to verify the same therefore, rejecting the claim of the appellant that the service tax has been paid by the service recipient is absolutely incorrect. 4.3 As regard the finding of the Learned Commissioner (Appeals) that even though the service recipient has paid the service tax the appellant is still liable to pay the service tax being a service provider is absolutely incorrect for the reason that in respect of any service, service tax has been paid by anyone, then the liability of the same service tax does not exit. Hence, the same cannot be recovered twice. This issue has been considered in various judgments . Some of them are cited by the appellant. Therefore, irrespective of any classification of service if on the same service tax has been paid by the service recipient to that extent the service tax demand will not survive against the appellant. 4.4 In view of the above observation, we are of the opinion that the matter should go back to the Adjudicating Authority to reconsider the entire matter. All the issues are kept open.