2013 (4) TMI 295 - AT - Service Tax

Eligibility for the benefit of Notification No. 12/2003-S.T., dated 20-6-2003 denied - as per AO assessee were also not eligible for paying service tax under the category of works contract - assessee was paying service tax under the category of Commercial and Industrial Construction services with effect from 16-6-2005 up to 30-6-2007 and thereafter started paying under the category of works contract - Held that - The Commissioner has confirmed the demand treating the amounts mentioned as receivables as service charges received by the appellant which is erroneous as the service tax is liable to be paid on actual amounts received and not on amounts which may be receivable and not yet received. Also the appellants have executed orders worth about Rs. 20 crores and they claim that value of goods involved in rendering of the said services is over Rs. 13 crores. Commissioner has totally disallowed the claim for deduction of value of goods as he has taken the entire value of Rs. 20 crores as value of services rendered. It is not disputed that the appellants have paid VAT on goods valued about Rs. 13 crores. Further, for the period prior to 1-6-2007, the denial of benefit of Notification No. 12/2003 may not be justified in the light of documents submitted by the assessee which contained detailed specifications and value of the material supplied/utilized while rendering the services. Undisputedly, the appellants have paid service tax of Rs. 18,42,993/- which according to them was payable after availing the benefit of Notification No. 12/2003 and under works contract from 1-6-2007. Thus the appellant has made out a case for waiver of balance of dues.

Summary

Issues:
Waiver of pre-deposit of service tax amounting to Rs. 2,36,80,916/-; Eligibility for Notification No. 12/2003-S.T.; Denial of benefit under works contract category.

Analysis:

Waiver of Pre-Deposit:
The application sought waiver of pre-deposit of a substantial service tax amount along with interest and penalties imposed. The appellant, engaged in executing "interior designs", argued that they were paying service tax correctly under specific categories. The Commissioner confirmed the demand, but the Tribunal found errors in the calculation. The Tribunal noted that service tax should be based on actual amounts received, not on receivables. Additionally, the Commissioner wrongly disallowed the deduction of the value of goods involved in the services. The Tribunal observed that any contract treated as a works contract for VAT should also be considered a works contract for service tax purposes.

Eligibility for Notification No. 12/2003-S.T.:
The appellant contested the denial of the benefit under Notification No. 12/2003, claiming they were eligible based on detailed specifications and values of materials supplied. The Tribunal found that the denial may not be justified for the period before a specific date, as the appellants had paid service tax after availing the benefit of the notification.

Denial of Benefit under Works Contract:
The Commissioner denied the benefit under the works contract category, stating that the appellants did not exercise the option for paying service tax under this head. The Tribunal disagreed, highlighting that the option under works contract arises when service tax is to be paid under a composite scheme. Referring to a Board's circular, the Tribunal emphasized that contracts treated as works contracts for VAT should also be considered as works contracts for service tax.

In conclusion, the Tribunal held that the appellant had a case for the waiver of the balance of dues, granting a waiver of pre-deposit and staying the recovery until the appeal's disposal. The decision provided clarity on the correct application of service tax rules and the eligibility for specific notifications and categories.