Nandhees Technologies Pvt. Ltd. Vs Commissioner of GST & Central Excise (CESTAT Chennai)
The appeal challenged Order-in-Appeal No. 497/2016 (STA-I) dated 29.08.2016 passed by the Commissioner of Service Tax (Appeals-I), Chennai. The appellant, registered for Maintenance or Repair Service, had undertaken maintenance and repair of UPS systems as a sub-contractor for M/s. Emerson Network Power India Pvt. Ltd. During audit, it was noticed that the appellant had received ₹1,19,53,559 towards maintenance services during 2004-05 to 2006-07 but had not paid service tax. A show cause notice dated 25.08.2009 demanded ₹13,18,116 in service tax, invoked the extended period, and proposed interest and penalty. The adjudicating authority confirmed the demand with interest and imposed an equal penalty under Section 78 of the Finance Act, 1994. The Commissioner (Appeals) dismissed the appellant’s appeal, leading to the present appeal before the Tribunal.
The appellant submitted that it acted only as a dedicated sub-contractor carrying out maintenance and repair work for its Principal. It received commission for such work and had paid service tax on the commission, which was undisputed. Repair charges collected from customers were remitted to the Principal, who discharged service tax on the maintenance services. The appellant relied on various Board circulars and clarifications issued prior to Master Circular No. 96/7/2007-ST dated 23.08.2007, which had stated in certain situations that sub-contractors were not required to pay service tax where the principal service provider had discharged the tax. It further contended that the show cause notice was issued beyond the normal limitation period of one year, there was no suppression of facts as it was registered and regularly filing ST-3 returns, and that prior to 16.05.2008, Section 65(105)(zzg) covered services provided “to a customer”, whereas the appellant rendered services only to its Principal. It also relied upon several judicial decisions and pointed out that, for another sub-contractor rendering similar services to the same Principal during the same period, proceedings had been dropped.
