M.K. Ghori & Associates Vs Commissioner (Appeals) (CESTAT Delhi)
Summary: M/s. M.K. Ghori & Associates, engaged in trading of goods and providing repair and maintenance services, challenged the order passed by the Commissioner (Appeals), Central GST & Central Excise, Raipur. The Commissioner (Appeals) had allowed the Revenue’s appeal against the adjudicating authority’s order dropping the proceedings on the basis that once the principal contractor had discharged service tax, the sub-contractor was not liable to pay tax.
The proceedings originated from data received from the Income Tax Department. A Show Cause Notice dated 22.10.2019 alleged that for Financial Years 2015-16 and 2016-17 there was only sale, whereas during Financial Year 2014-15 the appellant had provided services. The Adjudicating Authority, by order dated 06.02.2023, dropped the proceedings. The Revenue appealed and the Commissioner (Appeals) allowed the appeal, leading to the present proceedings before the Tribunal.
Before the Tribunal, the appellant raised two issues: whether a sub-contractor was liable to pay service tax when the main/principal contractor had already paid the tax, and whether the extended period of limitation under the proviso to Section 73(1) of the Finance Act, 1994 could be invoked when there were divergent Tribunal decisions.
On merits, the Tribunal followed the Larger Bench decision in Commissioner of Service Tax Vs M/s Melange Developers Private Limited, which held that payment of service tax by the main contractor did not discharge the sub-contractor’s independent obligation to pay tax on the consideration received by it. The Tribunal therefore held that the appellant was liable on merits.
