ORDER
T.K. Jayaraman, Member (T)
1. The applicant has fled this petition for rectification of mistake in respect of the Final Order No. 10 to 18/2007 dated 5.1.2007 passed by this Tribunal.
2. Shri Shiva Das, the learned Advocate, appeared for the appellants and Shri. K. Sambi Reddy, the learned JDR, for the Revenue.
3. Heard both sides. The learned advocate pointed out that the applicant of this petition was one of the appellants in respect of their above mentioned Final Order issued by this Tribunal. As regards the appellants, the Adjudicating Authority confirmed two demands one to the tune of Rs. 41,69,972/- on the ground that the appellants were not entitled to claim deduction of the value of the goods and raw-materials provided by them to their customers, as the same was not shown in the bills/invoices issued at the time of providing the services and the second one amounting to Rs. 31,04,826/- on the ground that the appellants are liable to pay Service Tax on the services rendered by them to other photographic studios, to which various customers provide the films for processing. It was pointed out that in respect of the first demand of Rs. 41,69,972/- the Tribunal in the Final Order set aside the demand based on the Apex Courts decision in the case of Bharat Sanchar Nigam Ltd. v. Union of India 2006-TIOL-15-SC-CT-LB and Adlabs v. CCE 2006 (2) STR 121. However with regard to the second demand of Rs. 31,04,826/- The Tribunal has not given any finding on the grounds submitted by the appellant. He said that this was an apparent mistake on the face of the record and the same has to be rectified.
4. It was pointed out by the learned advocate that this demand is based on the ground that appellants are liable to pay service tax on the services rendered by them to other photographic studios to which various customers provide the films for processing. He said that this is a subcontracting work. The various other photographic studios have subcontracted their work to the appellants and the appellants did not deal directly with the customers. He cited clarifications issued by the Board in respect of architect and market research agency etc. where it was clarified that the subcontractor is not liable to pay service tax on the taxable service rendered by them. He particularly referred to the circular dated 27.02.2001 clarifying that collection centres which get the processing done by the lab are not liable to pay service tax as they are not rendering any service to the customers. He emphasizes the point that the service tax is liable to be paid when the services are rendered to the customers. In this case the appellants do not render service directly to the customers. The customers have approached various photographic studios. In turn, those photographic studios have entrusted the work to the appellants. Therefore, he said that this principle has to be followed and relief should be given to the appellants.
5. The learned Departmental Representative made the point that even if they had rendered any service to the main photographers the appellants are liable to pay service tax.
6. The learned advocate further pleaded time bar. The show cause notice was issued on 9.8.2004 and demand is for the period from July 2001-2002. The entire demand is beyond the normal period of one year. It was urged that during the course of investigation the appellants provided all the details regarding the main contractors from whom they undertake the act of processing of photograph. Further it was stated that they were only required to disclose the primary facts to the department and thereafter it is left to the department to draw his inference based on the facts disclosed. When the appellants have disclosed all the primary facts and have also filed monthly return regularly, invocation of longer period is not sustainable. The learned advocate relied on the decision of the Tribunal in the case of Maruti Udyog Ltd. v. CCE 2002 (147) ELT 881. He also stated that it was not for the appellants to show evidence regarding the payment of service tax by the main contractor. It is only for the department to verify that fact and take necessary action as deemed fit.
6.1 On a very careful consideration of the entire issue, we find even though the final order had given relief to the appellants in respect of the demands confirmed by the commissioner of service tax, no clear-cut finding was given in respect of the second demand amounting to Rs. 31,04,826/-. We find that this represents the service tax on the value of the services rendered by the appellants in the capacity of subcontractors. We have clearly held in various decisions that when the taxable service is rendered by subcontractor, he is not liable to pay service tax. Our decision is based on various circulars of the Board and also on the principle that Revenue cannot demand service tax twice on the same services more than once. If the main contractor discharges the service tax liability, there is no need for subcontractor to pay the service tax. However it is for the Revenue to verify this fact and they should not expect the appellant to provide the evidence in this connection. In view of the above observations, we do not find any merit in the demand. We also note the fact that the entire demand is time barred. Therefore we set aside the demand amounting to Rs. 31,04,826/- for the above mentioned reasons. Thus we allow the miscellaneous application.
(Pronounced in open Court on 29 OCT 2007)