The Kolkata Bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) remanded the matter to the Adjudicating Authority for verification of documents in a case where a sub-contractor challenged a service tax demand, citing that the tax had already been paid by the main contractor.
Hill View Coals, the appellant was a sub-contractor providing Works Contract Services under a main contractor. In this arrangement, the main contractor was responsible for the larger project, while Hill View Coals handled part of the work under their direction.
As part of this process, the main contractor had already paid service tax on the entire contract amount to the government. Subsequently, the appellant received a service demand notice.
The appellant challenged the demand order before the Kolkata Bench of CESTAT arguing that since the main contractor paid the service tax, it should not be required to pay service tax for its role as a subcontractor.
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In a previous hearing, the appellant was directed to pre-deposit Rs. 8 lakhs under Section 35F of the Central Excise Act, 1944, but the appellant approached the Guwahati High Court due to financial difficulties and the inability to operate their business.
The Guwahati High Court directed the Tribunal to take up the Appeal and also directed the Tribunal to verify the fact of the main contractor paying the entire Service Tax.
The two-member bench comprising R. Muralidhar (Judicial Member) and Rajeev Tandon (Technical Member) noted that this issue had been previously considered, but adequate evidence had not been provided by the appellant regarding the main contractor’s tax payments.
The tribunal noted the High Court’s direction that the tribunal should take responsibility for verifying whether the main contractor had indeed paid the service tax.
The tribunal recognized that the task of verifying tax payments through contracts, agreements, payment challans, and returns (ST-3) was time-consuming and fell within the jurisdiction of the adjudicating authority.
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Therefore, the tribunal remanded the matter back to the adjudicating authority for verification of the main contractor’s service tax payments. The adjudicating authority was directed to complete the verification and if necessary, re-quantify any tax demands but limit it to the normal period of demand.
Thus, the appeal of the appellant was disposed of by remanding the case to the adjudicating authority.
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