SEW CONSTRUCTION LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THE short issue in this case is whether the subcontractor who provided service to the main contractor shall be exempted from levy of service tax. The Appellant being a sub -contractor of BHEL, executed certain work for such main contractor. The main contractor BHEL was awarded work order by BESCL. There is no dispute by either side on this modality of arrangement of contractor and sub -contractor. There is also no dispute that period involved in adjudication is 8 -7 -2005 to 7 -8 -2006, When the Appellant sub -contractor did not seek registration under Finance Act, 1994 and also did not file the return till 24 -1 -2007 for the above period, faced adjudication, resulting in levy of service tax demand of Rs. 1,51,14,126 with equal amount of penalty under Section 78 of Finance Act, 1994. So also penalty under Sections 76 and 77 was levied. The demand levied above was followed by interest under Section 75 of Finance Act, 1994.

(2.) LEARNED Authorised Representative appearing on behalf of the Appellant submits that they were under bona fide belief that the service provide by Appellant as sub -contractor to the principal contractor shall not be taxable under Finance Act, 1994 since principal contractor pays service tax. Therefore, they did not seek registration at the beginning of the impugned period. Returns were also not filed. But they subsequently sought registration and filed returns under law. Learned AR further submits that an amount of Rs. 38,75,813 was paid towards tax liability and Rs. 1,12,38,313 was adjusted by way of CENVAT credit. He further submits that due to bona fide belief of the Appellant they have suffered adjudication. He relies on the decision of the Larger Bench in the case of Vijay Sharma & Co. v. CCE, [2010] 29 STT 1 (New Delhi - CESTAT), to argue that sub -contractor is not liable to tax. He further submits that fit liability is determined, cum -tax benefit be given to the Appellant.

(3.) HEARD both sides and perused the records.