The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), denied invoking larger period of limitation in the matter of demand of service tax on sub-contractor for cargo handling service.
The appellant, M/s. Hari & Co, is a Customs House Agent and it appears that the Revenue noted the fact that the appellant had rendered services of loading, unloadingand transport of imported Potash from port area to the godown as a sub-contractor of M/s. Aspinwall & Co., for which they had received an amount of Rs.2 crores.
This made the Revenue to assume that although the above service was classifiable under ‘cargo handling service’, the appellant had not paid applicable Service Tax for the same. This prompted the issuance of the show cause notice thereby proposing to demand the above from the appellant.
The appellant had filed its reply inter alia claiming that the main contractor namely, M/s. Aspinwall & Co., having remitted the applicable service tax, there was no liability on the part of the sub-contractor, i.e. the appellant, to pay service tax once again.
The sub-contractor pleaded, relying on the alleged letter issued by the main contractor to them, that the main contractor had remitted applicable tax, and the main contractor remains non-committal on the taxes applicable/paid on behalf of its sub-contractors.
The Coram of P Dinesha, Judicial Member and Vasa Seshagiri Rao, Technical Member observed that “The appellant, as a sub-contractor, was duty bound to discharge the tax liability, perhaps the communication issued by the main contractor i.e., M/s. Aspinwall & Co., prompted them to believe that the tax had indeed been remitted. The villain appears to be M/s. Aspinwall & Co. who misled the appellant or made the appellant believe that it had remitted tax and in turn, made the appellant rely on the letter issued by it in response to Show Cause Notice issued by the Department.”
The Bench further noted that “We do not find any documents being brought out on record by the Revenue to prove mala fides on the part of this appellant, so as to justify invoking the larger period of limitation in this case. It is also a fact borne on record that the main contractor has not denied the fact of having collected full consideration including Service Tax from the clients.”
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