Service Tax
TRT-2025-
Cestat New Delhi
Date:-18-12-23
In:-
Issue Favourable to Tax Payer ?:-
Order Date – 18 December 2032
Parties: M/s Sipani Enterprises Vs Principal Commissioner of Customs, Central Excise & Service Tax
Facts –
- The Appellant, M/s Sipani Enterprises, were found to be paying tax on only 50% of said amount of consideration received by them in lieu of services provided to their major client M/s HEG. It was explained by the appellant that the services provided were considered as the Works Contract Service. Hence the appellant was discharging 50% of the leviable tax and remaining 50% by the recipient of the said service according to Notification No. 30/2012-ST dated June 20, 2012
- A show cause notice dated 14.07.2015 was served upon the appellants, invoking the extended period of limitation, alleging that the appellants have deliberately claimed inadmissible abatement and exemption thereby filing the incorrect service tax returns. Demand of service tax along with interest and penalty were imposed on appellant.
Issue –
- Whether the payment of 50% tax by the appellant and remaining 50% by recipient of its service resulted into short payment of duty, as alleged?
Order –
- The Tribunal observed that hat 100% tax liability towards the amount of consideration received by the appellant (the service provider) for providing services of ‘Packaging activity’ to M/s HEG (service recipient) stands discharged by the provider as well as the recipient to the extent of 50% each.
- There is also no denial to the fact that appellant itself is the manufacturer of the wooden crates i.e. the packing material used while providing the said service to M/s HEG is also manufactured by appellant the service provider and that the service is provided in M/s HEG premises itself. Hence it was held that the activity rendered by the appellant involves the element of goods i.e. wooden crates as well as the element of service i.e. the packing activity.
- With effect from 01.07.2012, it has been statutorily defined in Section 65B (54) of Finance Act, 1994 that any contract wherein transfer of property in goods is involved in the execution of such contract it is leviable to tax as sale of goods it shall be called as Works Contract Service to which applies the Notification No. 30/2012. Thus, it was held that the appellant was eligible for the abatement given under Notification No. 30/2012 dated 20.06.2012 vide entry No. 9 therein.
- Charging of service tax again from the appellant the service provider when the liability has been discharged by him under forward mechanism and by the service recipient under the reverse charge mechanism to the extent of 50% each in terms of relevant notification, will amount to the double taxation on the same service, question of alleging an intent to evade payment of service is absolutely in irrelevant. The department is held to have wrongly invoked the extended period of limitation.
- The appeal stands allowed.
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