Whether service tax can be demanded from service receiver if already paid by service provider?

PJ/CASE LAW/2015-16/2696

Case:-ANGIPLAST PVT. LTD. VERSUSCOMMISSIONER OF SERVICE TAX, AHMEDABAD

Citation:-2013 (32) S.T.R. 628 (Tri. - Ahmd.)

Brief facts:-This appeal is directed against order-in-appeal No. 282/2011 (STC)/k.anpazhakan/Commr.(A)/Ahd, dated 2-11-2011.
The relevant facts that arise for consideration are that during the course of audit it was noticed that the appellant were paying freight charges for outward transportation of the goods and had not discharged the Service Tax liability. It was concluded that the appellant being recipient of goods transport agency services and as per the provisions of Rule 2(1)(d)(v) of the Service Tax Rules, 1994 is required to discharge such Service Tax liability on the reverse charge mechanism as provided under provisions of the Finance Act, 1994. Appellant were issued show cause notice by the department demanding the Service Tax liability. The appellant replied to the said show cause notice claiming that out of the total Service Tax liability demanded, the transporters have paid an amount of Rs. 40,850/- and balance of Rs. 22,349/- is discharged by the appellant as a recipient of the services for inward transportation. The adjudicating authority after following the due process of law confirmed the demands, appropriated the amount paid by the appellant against demand of Rs. 22,349/- and imposed penalties besides seeking recovery of interest from the appellant.
Aggrieved by such an order, appellant preferred an appeal before the first appellate authority. The first appellate authority also did not agree with the contentions raised by the appellant and upheld the order-in-original.

Appellant’s contention:- Ld. counsel appearing on behalf of the appellant would submit that the appellant has discharged the Service Tax liability of Rs. 22,349/- while as regards the Service Tax liability on Rs. 40,850/- she submits that the details were given to the lower authorities and she would draw my attention to the certificates issued by the transport agencies which are annexed at page Nos. 35 to 39. It is her submission that the Service Tax demand of Rs. 40,850/- has been discharged by the transporters which is very clear from the certificate issued. It is her submission that in an identical issue, this Tribunal in the following cases has held that Service Tax liability cannot be fastened upon the recipient of the services.

1.         Navyug Alloys Pvt. Ltd. - 2009 (13)S.T.R.421 (Tri.-Ahmd.)
2.         Mandev Tubes - 2009 (16)S.T.R.724 (Tri.-Ahmd.)
3.         Geeta Industries Pvt. Ltd. - 2011 (22)S.T.R.293 (Tri.-Del.).

She would also rely upon the C.B.E. & C. Circular No. 341/18/2004-TRU (Pt.), dated 17-12-2004 which specifically states as to that Service Tax is discharged by the transporters, Service Tax should not be discharged from any other person to avoid double taxation.

Respondent’s contention:- Ld. Assistant Commissioner (AR) on the other hand would submit that these services which has been brought to the notice of the Bench are only indicating year-wise discharge of Service Tax liability by the transporters and does not give any specific details. It is his submission that in the absence of any specific details, first appellate authority was correct in dismissing the evidences produced not being authentic documentary evidence for discharge of Service Tax liability by the transporters.
They have considered the submissions made at length by both sides and perused the records. They find that the issue which has to be decided by the Tribunal is only in respect of the amount of Service Tax liability of Rs. 40,850/-, interest thereof and the various penalties imposed on such Service Tax liability on the ground that this amount of Service Tax liability is on the outward transportation facility availed by the appellant from various transporters.

Reasoning of judgment:- On perusal of the records, they find that there is no dispute that the amount of Service Tax liability which is contested before the Bench is in respect of the services rendered by M/s. Naranji Peraj Transport Co., M/s. Pathik Roadlines and Transport Corporation of India Ltd. On perusal of the certificates issued by these transport companies, as annexed page Nos. 36, 37 & 38, they find that these transporters have categorically stated that the Service Tax liability for the invoices raised on the appellant has been discharged by them and they had also mentioned their Service Tax registration number and PAN number in their certificates. As against such documentary evidences, the first appellate authority’s findings as to no authentic documentary evidence has been produced, seems to be incorrect. Since the certificates clearly indicate the Service Tax registration number, the least that could have been expected from the Revenue, was to call for the details from the concerned jurisdictional Service Tax authorities. Having not done, the lower authorities cannot shift the entire blame on the appellants for having not produced any authentic documentary evidence.
They find that the decision of this Bench in the cases Navyug Alloys Pvt. Ltd. (supra), Mandev Tubes (supra) and Geeta Industries Pvt. Ltd. (supra) will squarely cover the issue in favour of the assessee. They also find that C.B.E. & C. vide Circular dated 17-12-2004, specifically in para 5.7 stated that - “If Service Tax due on transportation of a consignment has been paid or is payable by a person liable to pay Service Tax, Service Tax should not be charged for the same amount from any other person, to avoid double taxation.”
In their view, the Board’s circular as well as the decisions relied upon by the ld. counsel would cover the issue in the favour of the assessee.
Accordingly, appeal to the extent it is challenged before the Tribunal for setting aside of the demand of the Service Tax liability of Rs. 40,850/- with interest and consequent penalties is set aside and the appeal is allowed to that extent.

Decision:-Appeal allowed.

Comment:- The analogy of the case is that when it is not in dispute that the service tax has been paid by the service provider, the demand cannot be raised on the service recipient on the contention that it was service receiver that was liable to pay service tax under reverse charge mechanism because it will lead to double taxation on the same transaction. In the present case, the Certificates issued by transport companies categorically specified that Service Tax raised in invoices was discharged by transporter. Certificates clearly indicating transport company’s Service Tax registration no. and PAN number. As per circular issued by C.B.E.C, if Service Tax due on transportation of a consignment has been paid or is payable by a person liable to pay Service Tax, Service Tax should not be charged for the same amount from any other person, to avoid double taxation. Hence in the given case, as the service tax liability was already discharged by the transporter, therefore, appellant was not liable to pay service tax again as this will amount to double taxation.

Prepared by: - Monika Tak

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PJ/CASE LAW/2015-16/2696

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