2014 (5) TMI 1131 - AT - Service Tax

Works Contract Service - erection and commissioning or installation services - denial on the ground that they have not filed any written option to avail said works contract scheme composition scheme benefit - Held that - the option to be exercised is not required to be exercised in writing and the very fact of payment of duty under the composition scheme reflects upon the option of the assessee. As such, I find no reason to deny the benefit - appeal allowed - decided in favor of appellant.

Summary

Issues:
Denial of service tax benefit under Works Contract Scheme for erection and commissioning services due to lack of written option for composition scheme in 2009-2010.

Analysis:
The judgment addresses the issue of denial of the benefit of payment of service tax under the Works Contract Scheme for erection and commissioning services to the appellant for the period 2009-2010. The appellant was denied the benefit on the grounds of not filing a written option to avail the works contract scheme composition scheme benefit. However, it was noted that similar proceedings were initiated against the appellant for the earlier period from 2006-2009, which were concluded by the Commissioner's order dated 20-7-2011. In that order, the Commissioner acknowledged that there was no requirement to file a written intimation for payment of service tax under the Composition Scheme. The Commissioner observed that the appellant had paid the service tax at the prescribed rate, indicating their wish to opt for the composition scheme. The Commissioner allowed the benefit of the composition scheme as the appellant fulfilled the conditions mentioned in the relevant notification.

The judgment further highlights that the option to avail the composition scheme does not necessarily need to be exercised in writing. The act of payment of duty under the composition scheme itself can be considered as reflective of the appellant's choice. Therefore, the Tribunal found no justification to deny the benefit to the appellant based on the lack of a written option. Consequently, the impugned orders were set aside, and the appeal was allowed with consequential relief granted to the appellant. The Tribunal's decision was based on the understanding that the payment of service tax at the specified rate was indicative of the appellant's intention to opt for the composition scheme, as evidenced by their compliance with the conditions outlined in the relevant notification.

In conclusion, the judgment clarifies that the absence of a written intimation does not automatically disqualify an assessee from availing the benefits of a composition scheme if the payment of duty at the prescribed rate demonstrates the assessee's intention to opt for such a scheme. The decision emphasizes the importance of substance over form in determining eligibility for scheme benefits and upholds the principle that compliance with the scheme's requirements, even without a written declaration, should be sufficient to grant the associated benefits.