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PJ/Case Laws/2011-12/1465

Service Tax Liability of Sub-Contractor

Case: COMMISSIONER OF CENTRAL EXCISE, RAIPUR Vs M/s JETHSON BUILDERS PVT LTD
 
Citation: 2011-TIOL-1613-CESTAT-DEL
 
Issue:- Demand against sub-contractor requires verification of discharge of service tax liability by prime contractor.
 
Brief Facts:- Demand of service tax was raised against the respondent who is a sub-contractor. The Commissioner (Appeal) set aside the demand on the ground that respondent is a sub contractor and the main contractor has discharged the entire Service tax on the cost value of the contract. As such confirmation of demand of duty against the sub contractor would amount to double taxation.
 
Against the said order, Revenue is in appeal before the Tribunal. 
 
Appellant’s Contention:- Revenue pleaded the demand and penalties were set aside without verification as to whether the prime contractor had discharged the tax on full value of contract or not. It is submitted that if on verification the appellants’ plea of discharging the tax on the entire gross value by the main contractor is found to be incorrect, Revenue is not left with any other alternative inasmuch as the Commissioner (Appeals) has already set aside the demands and penalties.
 
Reasoning of Judgment:- The Tribunal found force in Revenue’s contention. It is found that Comm(A) by accepting the respondents contention, has set aside the demand and penalties, subject to verification, inasmuch as the Commissioner (Appeals) has no powers of remand the matter. As such, the Appellate Authority could not have remanded the matter for verification of the above factual position. That may be the reason for passing the type of order which stands passed in the present matter.
 
However, inasmuch as the verification is one of the essential fact for setting aside of demand, the Tribunal is of the view that matter should be remanded to the original adjudicating authority for carrying out the verification of the above factual fact and decide the consequent duty liability of the respondents. Matter to be examined only on factual position as Revenue has only agitated against the order on facts.
 
Decision:- Appeal allowed by way of remand.

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