Whether service receiver is liable to remit service tax to service provider, even in the absence of Clause to that effect in theagreement?

Bhagwati Security Services (Regd.) vs. UOl, BSNL [2014] 45 taxmann.com 217 (Allahabad)

FACTS

Petitioners entered into agreement with respondent No.2, i.e., BSNL

for providing security service. Subsequently, service tax wasdemanded from the petitioner which was deposited by the petitioner. The petitioner applied before respondent No. 2 for reimbursement of the service tax, which request was denied by the respondent No.2 on the ground that the reimbursement of theservice tax was not contemplated in the service agreement.

HELD

High Court held that, service tax is statutory liability which is required to be collected by the service provider from the person towhom service is provided, and thereafter to be deposited with the Government treasury within the prescribed time. Thus, essentiallythe statute is being imposing the tax upon the person to whom service is being provided, and the service provider is merely acollecting agency. The High Court therefore directed BSNL to make reimbursement of service tax to the petitioner without furtherdelay.