Construction Sub-Contractor Cannot Escape Service Tax Liability When Main Contractor Is Taxable: CESTAT
The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has said that development sub-contractor can not escape service tax legal responsibility when major contractor is taxable.
The Bench of Binu Tamta (Judicial Member) and Hemambika R. Priya (Technical Member) has said that the development of residential complexes was not exempt from service tax responsibility. Therefore, the sub-contractors had been liable to discharge their service tax legal responsibility on such companies offered by them to the major contractor.
The case includes the legal responsibility of assessee/M/s Rahul Agrawal, Damoh to pay service tax for offering development companies to M/s Agrawal Builders & Builders, Damoh (major contractor)
The concern arose when the division recognized that the appellant no.1, a sub-contractor, had not registered for service tax and had didn’t pay the relevant service tax on funds obtained throughout the interval from Monetary 12 months 2012-13 to 2016-17.
A present trigger discover was issued, citing that funds obtained by the assessee for companies offered to the principle contractor had been liable to service tax, as these funds fell underneath Part 66B of the Finance Act, and repair tax of Rs.17,83,596/- was due for this era.
The adjudicating authority dropped the service tax demand holding that the principle contractor had paid service tax. The Commissioner (Appeals) put aside the order handed by adjudicating authority and held that the assessee should pay service tax if the principle contractor is taxable. The assessee has challenged the order handed by the Commissioner (Appeals) earlier than the Tribunal.
The assessee contended that the sub-contractors had been solely brokers of the contractor and the property in items handed straight from the sub-contractors to the employer and due to this fact there can solely be one Sale which is acknowledged by the authorized fiction created underneath Sub-article (29A) of Article 366. Therefore, there’s just one taxable occasion of sale of products in such a transaction.
The Tribunal noticed that after 1.7.2012, the companies offered by Sub-contractor was exempted provided that the companies offered by the principle contractor had been exempted. If major contractor was liable to Service Tax, sub-contractor was additionally liable to Service Tax.
The development of residential complexes was not exempt from service tax responsibility. Therefore, the sub-contractors, viz., Appellant no. 1 and appellant no. 2 had been liable to discharge their service tax legal responsibility on such companies offered by them to the principle contractor viz., M/s Agarwal Builder and Builders, Damoh, added the bench.
In view of the above, the Tribunal dismissed the enchantment.
Case Title: Shri Rahul Agarwal v. Commissioner CGST, Customs & Central Excise, Jabalpur
Case Quantity: SERVICE TAX APPEAL NO. 50395 OF 2019
Counsel for Appellant/Assessee: Pradumna Singh
Counsel for Respondent/Division: Anand Narayan
