Utility Labour Suppliers Vs Commissioner Of C.E. (CESTAT Ahmedabad)
Demand of service tax cannot be raised when the tax liability has already been discharged under RCM: CESTAT Ahmedabad
Summary: In the case of Utility Labour Suppliers v. Commissioner of C.E.-Ahmedabad-II, the CESTAT Ahmedabad ruled that service tax cannot be demanded from the appellant if the tax liability has already been discharged under the Reverse Charge Mechanism (RCM). The appellant, a manpower supplier, was initially issued a Show Cause Notice for under-declaring taxable value in their ST-3 returns. However, it was established that the pharmaceutical companies, as recipients of the service, had already paid the full service tax under the RCM as per Notification No. 30/2012-ST. The CESTAT found that the department had erred in demanding service tax from the appellant, as this would result in double taxation. Since the tax had already been paid by the service recipients, the tribunal set aside the demand, reinforcing the principle that once tax is discharged by the recipient, no further demand can be raised from the supplier.
The CESTAT, Ahmedabad in the case of Utility Labour Suppliers v. Commissioner of C.E.-Ahmedabad-II [Service Tax Appeal No. 10780 of 2022-DB dated November 26, 2024] held that demand of service tax cannot be raised when the tax liability has already been discharged under RCM.
