Recipient can’t be asked to pay ST under reverse charge, if ST paid by service provider

In a recent judgement dated 18.03.2013 delivered by CESTAT Ahd Bench in the case of Angiplast (P) Ltd. vs CST, Ahemdabad, it has been held that Recipient cannot be asked to pay service tax under reverse charge, if service tax discharged by service provider.

Section 65(50b), read with section 68, of the Finance Act, 1994 and rule 2(1)(d) of the Service Tax Rules, 1994 – Goods Transport Agency’s Services – Assessee-company paid freight charges for outward transportation of goods and did not discharge service tax thereon under reverse charge – Assessee claimed that Rs. 40,850 out of total demand had been paid by transporters/service-providers themselves for which requisite certificates were enclosed and only balance Rs. 22,349 was payable by them, which was, accordingly, paid – Assessee argued that since service tax had been paid by service provider, tax liability could not be fastened upon them as recipient – HELD : Transporters/service-providers had, in their certificates, categorically stated that service tax liability for invoices raised on assessee had been discharged by them and they had also mentioned their service tax registration number and PAN number in their certificates – In view of such documentary evidences, it could not be said that there were no authentic documentary evidences – Since certificates clearly indicated service tax registration number, revenue was expected to call for details from concerned jurisdictional service tax authorities – Having not done so, Department cannot shift entire blame on assessee – In view of judgments in Navyug Alloys (P.) Ltd. v. CCE [2008] 17 STT 362 (Ahd. – CESTAT) Mandev Tubes v. CCE [Final Order No A/912/2009-WZB/Ahd, dated 20-5-2009] and CST v. Geeta Industries (P.) Ltd. and Circular No. 341/18/2004-TRU (Pt.) dated 17-12-04, assessee could not be made liable to pay any service tax – Hence, demands were set aside.

Circulars and Notifications Referred in this case : Circular No. 341/18/2004-TRU (Pt.) dated 17-12-04