No RCM Demand Where Service Provider Paid Tax Under Forward Charge: CESTAT Hyderabad

Arunachala Logistics Pvt Ltd Vs Commissioner of Central Tax (CESTAT Hyderabad)

No demand of Taxes under Reverse Charge if Tax Already Discharged by Service Provider under forward charge: CESTAT Hyderabad

The CESTAT, Hyderabad in the case of M/s Arunachala Logistics (P) Ltd. v. Commissioner of Central Tax, Hyderabad [Service Tax Appeal No. 30548 of 2018, Final Order No. A/30129/2026, order dated February 27, 2026]held that where the entire service tax liability has already been discharged by the service provider, any further demand on the service recipient under the Reverse Charge Mechanism (RCM) would amount to double taxation; however, such benefit is subject to the assessee conclusively proving that the tax has indeed been paid by the service provider.

Facts:

M/s Arunachala Logistics (P) Ltd. (‘the Petitioner’) is engaged in providing ‘Clearing and Forwarding Agent Services’ and ‘Goods Transport Agency (GTA) Services’.

The Commissioner of Central Tax, Hyderabad (‘the Respondent’) issued demand alleging that the Petitioner failed to discharge service tax liability under Reverse Charge Mechanism (RCM) on security services received from non-body corporate service providers.

The Petitioner contended that service providers had already paid 100% of the service tax on the entire consideration, and the tax component was reimbursed by the Petitioner. Therefore, there was no loss of revenue and no requirement to pay tax again under RCM.