2014 (6) TMI 692 - AT - Service Tax

Valuation - works contract composition scheme - inclusion of advance termed as mobilisation advance from their customer - Held that - there seems to be contradictory stand taken by the appellant himself, which needs to be verified. - another grievance of the appellant is that the lower authorities have demanded the tax on the mobilisation amount separately, by applying the rate of service tax at 10%. - matter remanded back. Valuation in respect of contract where composition scheme not opted by the assessee - Held that - the two contracts, where the appellant did not exercise works contract would be assessed to duty in terms of Section 66. The lower authority would also examine the appellant s claim of exemption in respect of construction of roads, involved in one of the contracts, which stand exempted with retrospective effect. - matter remanded back - decided partly in favor of assessee.

Issues involved:
1. Dispute regarding service tax demand and penalty pre-deposit.
2. Inclusion of mobilization advance in works contract value.
3. Contradictory stand by the appellant.
4. Applicability of service tax rates on mobilization amount.
5. Assessment of service tax for contracts not under composition scheme.
6. Exemption claim for construction of roads in one contract.

Analysis:

1. The judgment dealt with a dispute involving a significant service tax demand and penalty pre-deposit issue. The appellant had already deposited a substantial amount, and the tribunal dispensed with the pre-deposit condition to proceed with the appeal. The dispute primarily revolved around factual aspects requiring verification by the original adjudicating authority.

2. The core issue in the appeal was the inclusion of mobilization advance in the works contract value. The Revenue contended that the advance was not included, while the appellant claimed to have paid service tax on the entire contract value, including the advance. The tribunal noted the contradictory stand taken by the appellant, emphasizing the need for verification of facts. The legal requirement to include the advance in the works contract value was acknowledged, with a specific concern raised regarding the applicable service tax rate on the mobilization amount.

3. The tribunal highlighted the contradictory stance adopted by the appellant, which needed clarification and verification. While the appellant did not dispute the legal obligation to include the advance in the contract value, there was a discrepancy in the tax rate applied by the lower authorities. The tribunal directed the adjudicating authority to address the appellant's grievance regarding the service tax rate discrepancy during the verification process.

4. Regarding contracts not under the composition scheme, the adjudicating authority had assessed service tax under Section 66 of the Finance Act. The appellant accepted this declaration of law, leading to a decision that contracts not opting for the composition scheme would be subject to duty as per Section 66. Additionally, the tribunal instructed the lower authority to examine the appellant's claim for exemption concerning the construction of roads in one of the contracts, which was retroactively exempted.

5. In conclusion, the stay application and appeal were disposed of with a comprehensive analysis of the issues involved, providing directions for further verification and assessment by the adjudicating authority. The judgment addressed the complex legal and factual aspects of the dispute, ensuring a thorough examination of the contentions raised by both parties.

← Previous Next →