The liability to pay service tax lies with the service provider, but in exceptional cases where the service provider has already remitted sums of money to the recipient, the liability may fall on the recipient.

JUDGMENT :

The unsuccessful respondents in W.P. No.12322/2014 have preferred this intra-court appeal for calling in question a learned Single Judge's order dated 18.04.2023 whereby the said writ petition came to be allowed holding that it is the liability of the appellants herein to pay the service tax, though they happened to be the recipient of services and as a corollary, the writ petitioner who happens to be respondent No.4 herein has been relieved of the obligation.

2. Learned panel counsel appearing for the appellants vehemently submits that the liability to pay the service tax cannot be denied is true; however, on whose shoulders such liability rests is a matter of contract between the parties namely, the service provider and the service recipient; under the arrangement in question, such an obligation lies with the service provider only. He adds that all this having been wrongly assessed, the impugned order is liable to be set at naught. Learned CGC appearing for the official respondents repels the submission of the appellant contending that the learned Single Judge's views accord with the rulings of the Courts.

3. Having heard the learned counsel appearing for the parties and having perused the appeal papers, we decline interference in this matter broadly being in agreement with the reasoning of the learned Single Judge who has structured the impugned order keeping in view the observations of the Apex Court in UNION OF INDIA vs BENGAL SHRACHI HOUSING DEVELOPMENT LIMITED, (2018) 1 SCC 311, which discusses the difference between a taxable event and the taxable person. Service tax is an indirect tax and therefore it can be passed on by the service provider to the recipient of service, is true as a general proposition.

4. The above having been said, one has to keep in view peculiar fact situation of a case. When the service provider has already remitted certain sums of money to the service recipients namely, the appellants as has been mentioned in para 14 of the impugned order in a tabular form, the general proposition would not come to the aid of appellants and their case would fall in an exception thereto. The tabular form contains the information furnished by the learned counsel appearing for the Revenue before the learned Single Judge and the same is as under:

5. The vehement submission of learned counsel appearing for the appellants that under the lease deed dated 18.11.2010 in question, a condition is incorporated whereunder the service provider has to pay all rates, taxes etc., gains some support, is true. However, condition No.2 in para VI of the lease deed which is an exception to the general rule incorporated in condition No.1 reads as under:

"2. In case of failure by the lessors to pay the said amount dues as above, the lessee shall have the right to pay the said amounts upon receipt of notice on it by the said authorities and deduct the same out of the monthly rent payable to the lessors."

Learned CGC Smt. Anupama Hegde appearing for the UOI is justified in placing reliance on a decision of Delhi High Court in M/S MEATTLES PVT. LTD. vs HDFC BANK LIMITED, 2012 SCC OnLine Del 5508 in support of her submission that in the fact matrix of the appeal at hands, the liability to pay the service tax stands transferred to the shoulders of the appellants, coupled with its past conduct of making the payment itself. At para 9, what is observed as under comes to the rescue of respondents; "…The legislative intent, therefore, is quite clear i.e. the service tax is to be ultimately borne by the recipient of the service, though it is the service provider who is statutorily liable to pay th