Liability to Pay service tax if the Recipient does not Reimburse Service Tax

Service provider is liable to pay service tax even when service recipient doesn't reimburse service tax

CESTAT, MUMBAI BENCH

Avtar & Company

v.

Commissioner of Central Excise, Nagpur*

P.R. CHANDRASEKHARAN, TECHNICAL MEMBER
AND ANIL CHOUDHARY, JUDICIAL MEMBER

FINAL ORDER NO. A/40/2014-WZB/C-I(CSTB)
APPEAL NO. ST/170/2008-MUM

JANUARY  15, 2014 

Service tax liability is not dependent on whether service recipient makes payment of service tax or not; taxable event is rendering of service and merely because service recipient did not pay service tax liability initially, that would not take away/obliterate liability on service provider to discharge tax

Section 66 of the Finance Act, 1994 - Charge/levy - Service Tax - Period from 16-6-2005 to 24-9-2006 - Assessee claimed that it did not pay service tax because service-recipient did not reimburse same to them and service-recipient was in correspondence with Government of India in this regard - HELD : Service tax liability is not dependent on whether service recipient makes payment of service tax or not - Taxable event is rendering of service and liability has to be discharged on receipt of consideration - Merely because service recipient did not pay service tax liability initially, that would not take away/obliterate liability on service provider to discharge tax - If this plea is accepted, it would make taxable event as receipt of service tax from recipient of service, which is not the law - Law envisages payment of service tax on rendering of taxable service and it has nothing to do with receipt of service tax from service-recipient [Para 5.3] [In favour of revenue]