Order Date – 21 July 2023

Parties: M/s. Aadarsh Sri Sai Manpower Solution (p) Ltd., Shri Madan Singh Rawat, Director and Shri Trilok Singh Rawat, Director Vs Commissioner, Customs, Central Excise & Service Tax

Facts – 

• The Appellant, M/s. Aadarsh Sri Sai Manpower Solution (p) Ltd., was issued with a show cause notice alleging that though the appellant was required to pay service tax on the taxable amount received from the clients on account of manpower recruitment or supply agency service provided by them to their clients, and the reverse charge mechanism introduced by notification dated 20.06.2012 would not be applicable to the appellant since it was a private limited company, the appellant had short paid service tax.
• Accordingly, the demand was confirmed, and penalty was imposed on both the Directors.

Issue – 

• Whether the appellant had discharged their service tax liability?

Order – 

• The Tribunal observed that the issue was examined by the Karnataka High Court in Zyeta Interiors Pvt. Ltd. vs. Vice Chairman Settlement Commissioner, Chennai held 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.
• 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. The penalties could also not, for this reason, be imposed upon the directors of the appellant.

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