Case Law Details
Aadarsh Sri Sai Manpower Solution (p) Ltd. Vs Commissioner, Customs, Central Excise & Service Tax (Delhi High Court)
CESTAT Delhi held that when the entire tax due has been deposited in the account of Central Government it is not possible to sustain the demand. Even though instead of payment of 100% tax by service provider, 75% tax is paid by recipient and 25% tax is paid by provider, the service provider cannot be asked to pay the tax again.
Facts- The office premises of the appellant and the residential premises of the two directors of the appellant were searched by the Central Excise officers on 27.02.2014 and after investigation, a show cause notice dated 15.10.2015 alleging short payment of service tax, was issued demanding service tax amounting to Rs. 5,20,16,634/- along with interest. Penalties on the appellant and its directors were also imposed.
The show cause notice alleged that though the appellant was required to pay service tax on the taxable amount received from the clients on account of manpower recruitment or supply agency service provided by them to their clients, and the reverse charge mechanism introduced by notification dated 20.06.2012 would not be applicable to the appellant since it was a private limited company, the appellant had short paid service tax. The show cause notice also proposed to impose penalty upon the two directors.
The issue that requires consideration in this appeal is as to whether payment of 75% tax by the recipient of service, when the service provider (the appellant) was required to deposit 100% tax but paid only 25% tax could be treated as discharge of service tax liability by the appellant.
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