The Kolkata bench of the Customs, Excise & Service Tax Appellate Tribunal(CESTAT) upheld the Service Tax on sub-contract work for Map Making undertaken for the main contractor between the Period October 2007 to March 2008 only.
M/s C E Testing Company Pvt. Ltd, the Appellant has been registered with Service Tax since October 2003. They were providing various services under the category of ‘Technical Testing and Analysis Service’, ‘Survey and Map Making Service’ etc. A Show Cause Notice demanding service tax was Issued because the turnover shown by them in the ST-3 Returns was lower than the turnover shown by them in their Income Tax and Balance Sheet.
After due process, the Adjudicating Authority dropped the demand to the extent of Rs.73,07,023/-. He confirmed the demand of Rs.25,70,758. Being aggrieved by the confirmed demand, the Appellant is before the Tribunal. Being aggrieved by the dropped demand of Rs.73,07,023/-, the Revenue is before the Tribunal with their Appeal.
The Advocate appearing on behalf of the Appellant Assessee submitted that they had provided all the documentary evidence in the form of their P & L Account, Balance Sheet, ST Returns, CA Certificate etc., along with a complete Reconciliation Statement to the Adjudicating Authority
After going through the documentary evidence placed in every case, the Adjudicating Authority has dropped the demand of Rs.73,07,023/-. He reiterated the detailed findings given by the Adjudicating Authority for dropping this demand and submitted that the Adjudicating Authority had correctly dropped the demand.
It was argued that the services provided by them cannot be treated as taxable services since the Appellant assesse was acting as a sub-contractor to the main contractor. He further submitted that the Adjudicating Authority is in error in relying on Circular No. 96/6/2007-ST dated 23/8/2007 to hold that the service provided by the Appellant assesse cannot be treated as any service provided by the sub-contractor to the main contractor.
It was argued that the Services rendered by the Appellant are in respect of ‘Survey and Map Making Services’ and the provisions of the sub-contractor providing service to the main contractor would not arise and justify the demand confirmed by the Adjudicating Authority.
The Show Cause Notice has been issued merely on the ground that the income shown by the Appellant in their P & L Account is higher than the turnover declared in the ST 3 Return. The Appellant has submitted a detailed Reconciliation Statement duly certified by the Chartered Accountant which has been taken on record by the Adjudicating Authority
In terms of rule 6 of the said Rules, Service Tax is payable on the payment received towards the value of taxable services. Thus Service Tax is payable on the payment received towards the value of taxable services. Thus Service Tax is payable on actual receipts.
It was found that the method adopted in the SCN for the calculation of tax liability is in congruence with the provisions of the law. In view of the above, the said assessee’s contentions that Service Tax was not demanded based on receipt of value of services is not tenable.
In view of the above, it cannot be said that the Survey and Map Making Services provided to HSCL in respect of the construction of roads and bridges are excluded from the purview of Service Tax. The above deliberation leads to the conclusion that Rs.2,16,23,888/- received by the said assessee by way of providing service as sub-contractor/sub-consultant during the material period is taxable.
It was found that a uniform tax rate was not applicable during the material period. The rate of tax varied in subsequent years under consideration. However differential cum-tax values corresponding to different tax rates are not available.
A two-member bench of Mr R Muralidhar, Member (Judicial) and Mr K Anpazhakan, Member (Technical) held that the Appellant is required to pay the Service Tax on sub-contract work (map making) undertaken by them for the main contractor between the period October 2007 to March 2008 only.
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