By TIOL News Service

HYDERABAD, JUNE 28, 2016: THE appellant undertook contract work awarded by National Geographical Research Institute, Hyderabad (NGRI), a Government of India undertaking, for conduct of drilling shot holes, seismic job services and topographical survey during the period February 2008 to May 2008. The agreement was entered between appellant and Council of Scientific & Industrial Research (CSIR) who had taken up the said project for M/s. Essar Oil Corporation, Mumbai (service recipient). During the course of audit, it was observed that appellants had not discharged their service tax liability on the amounts received as subcontract charges. The appellant defended the notice contending that the main contractor NGRI has discharged the service tax liability on the amount received from the client and that therefore they are not liable to pay any service tax under the subcontract agreement. After due process of law, the original authority held that appellants are liable to pay the service tax. In appeal, Commissioner(Appeals) upheld the liability to pay the tax but reduced the penalty. Hence the present appeal.

Revenue contended that the information/reply received under RTI Act from NGRI is not conclusive proof of payment of tax and cannot be accepted.

After hearing both sides, the Tribunal held:

++ The main dispute revolves around the question whether the information/reply received under RTI Act can be accepted as evidence. It is seen that the authorities below did not consider the document submitted by appellant i.e. the information received under RTI Act, 2005 on the ground that it is not conclusive proof of payment of tax. On the application filed seeking information regarding the details of payment of service tax paid by NGRI in regard to the contract sponsored by M/s. Essar Oil Ltd. which is subject matter of dispute herein, NGRI has given the details of the payment of service tax. This document shows that out of the value of Rs.480.15 lakh, the appellant was given subcontract of Rs.2,38,81,490/-. For the total value of Rs.480.15 lakhs, NGRI has paid service tax of Rs.46,48,393/-. That a balance amount of Rs.34.56 lakhs is yet to be received by NGRI.

++ The information / document made available by the Public Information Officer (PIO) is something which is already recorded in the official records of the public office/authority. On receiving application, the PIO just furnishes a copy of the information contained in the records kept in proper custody. Section 3 of RTI Act states that every citizen shall have the right to information and may obtain the same by submitting an application. The information so received shows that NGRI has paid service tax on the same services. The information having been provided by a public office under the provision of Right to Information Act, 2005, there is no reason to disbelieve the same. The Tribunal in Urvi construction Vs. CST, Ahmedabad - 2009-TIOL-1890-CESTAT-AHM and in Nana LalSuthar Vs. CCE, Jaipur-I - 2015-TIOL-2357-CESTAT-DEL have held that when main contractor has discharged the service tax liability, there can be no demand against the subcontractor for the same services for the same period. Following the same, the it is held that that the appellants have succeeded in establishing a case in their favour.

(See 2016-TIOL-1552-CESTAT-HYD)