RCM not payable in absence of service receiver & provider relationship

Tripura State Co-Operative Bank Limited Vs Commissioner of Central Excise & Service Tax (CESTAT Kolkata)

CESTAT Kolkata held that in absence of service receiver and service provider relationship, there is no service tax liability under reverse charge mechanism (RCM) for payment of service tax, vide notification 30/2012 ST (Sr. No. 9 of the table) dated 20.06. 2012 as amended.

Facts- The Tripura State Cooperative Bank Ltd, Agartala (TSCBL), registered under banking and financial services awarded contract for construction of a multi-storied building for the bank purpose to Tripura Housing and Construction Board, Agartala (THCB) for an amount of rupees 4,56,00,000/-.

THCB further awarded and has subcontracted the construction of the building to Shri Dipak Paul, for a value of Rs.4,06,16,850. 00/-. The service tax liability on this amount received by Shri Dipak Paul comes to Rs.19,13,494.00/- . By virtue of reverse charge mechanism for payment of service tax, vide notification 30/2012 ST (Sr. No. 9 of the table) dated 20.06. 2012 as amended, the service provider, is liable to pay 50% of the tax that is an amount of Rs.9,56,747.00/-, while the balance 50% is required to be paid by the service receiver.

M/s Dipak Paul have discharged service tax liability along with interest and have paid an amount of Rs.10,21,525/- to the department, as share of their liability.

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