2025-VIL-730-CESTAT-ALH-ST
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SERVICE TAX CESTAT Cases

Service Tax – Majority Order - Service Tax Liability on Sub-Contractor, Extended Period of Limitation – Appellant is engaged in providing 'Works Contract Services' and 'Erection, Commissioning & Installation Services' - Whether the decision of the Tribunal in the case of Commissioner of Customs & Central Excise, Indore Vs. Shivhare Roadlines and JAC Air Services Pvt. Ltd. Vs. Commissioner of Service Tax would apply or the issue having been settled by the Larger Bench in the case of CST Vs. Melange Developers P.Ltd. would apply and, therefore, the demand needs to be confirmed only for the normal – HELD – The Shivhare Roadlines decision was rendered on account peculiar circumstances as the period in dispute and the impugned order passed therein was before the issuance of the Master Circular dated 23.08.2007 clarifying that sub-contractors are also liable to service tax. In that view, it was held that the sub-contractor shall not be doubly taxed if the principal-contractor has already paid the duty amount - the issue on merits stands concluded by the Larger Bench of the Tribunal in the case of CST vs. Melange Developers P. Ltd. wherein it was held that a sub-contractor would be liable to pay service tax even if the main contractor has discharged the service tax liability on the activity undertaken by the sub-contractor in pursuance of the contract. This decision is binding and has to be followed in the present case as well as in all future cases, unless a decision contrary to that is rendered by a higher forum - the issue of interpretation regarding the liability of a sub-contractor to pay service tax was a matter of dispute during the relevant period, and there were divergent views expressed by various Benches of the Tribunal as well as circulars and trade notices issued by the Department. In such cases, where the assessee has a bonafide belief that it is not liable to pay the tax based on the prevailing interpretation, the extended period of limitation cannot be invoked. Therefore, the demand can only be restricted to the normal period of limitation and the extended period demand is set aside - The appeal is partly allowed by Majority Order
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