Recipient of Service to Pay Applicable Service Tax as per Reverse Charge Mechanism: CESTAT Allows Appeal [Read Order]

The Customs, Excise and Service Tax AppellateTribunal (CESTAT), Allahabad Bench, allowed an appeal and held that the recipient of service is liable to pay the applicable service tax as per reverse charge mechanism.

The appellants, M/s Pankaj Dua and Associates, have not paid service tax and not filed service tax returns for considerations of INR 13,60,000/- and INR 15,99,749/- in Financial Years 2015-16 and 2016-17. Accordingly, a show cause notice (SCN) was issued on 24.05.2021 demanding service tax of INR 4,37,162/-. The Deputy Commissioner of CGST, Ghaziabad confirmed the proposal in the SCN which was upheld.

The counsel for the appellant submitted that they had provided manpower services to NAVAIR International Pvt. Ltd. in 2015-16 and Ecom Express Ltd. in 2016-17. The counsel drew attention to Notification No. 30/2012-ST dated 20.06.2012 amended by Notification No. 07/2015-ST dated 20.06.2015.

Accordingly, it was argued that the applicable service tax in respect of manpower recruitment agency is to be paid by the service recipients on reverse charge mechanism (RCM).

The opposing counsel argued that the appellant did not have sufficient evidence of necessary documents to prove that the service had been rendered to the said companies.

The tribunal, via P.K. Choudhary (Judicial Member) and P. Anjani Kumar (Technical Member), observed that the appellant had, in fact, submitted necessary documents to support their claim. Further, CESTAT noted that it is the responsibility of the person who makes the allegation to prove the evidence.

The two member bench allowed the appeal, noting that the applicable service tax is to be paid by the recipient of the service on RCM basis.

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