2014 (10) TMI 641 - AT - Service Tax

Waiver of pre deposit - Construction of Residential Complexes - Works Contract Composition Scheme - Held that - Prima facie, applicant is eligible for the benefit of Works Contract Composition Scheme. Considering the fact that the tax liability has been discharged by the appellant as per the scheme, we waive pre-deposit of balance dues arising out of the impugned order. Further there shall be stay on collection of such dues till the disposal of the appeal - Stay granted.

Summary

Issues: Dispute over service tax payment under Works Contract Composition Scheme for construction of Residential Complexes from April 2007 to March 2011.

Analysis:
1. Issue of Service Tax Payment: The applicant, engaged in constructing Residential Complexes, faced a dispute with Revenue regarding the payment of service tax. The contention was whether the applicant correctly paid service tax under the Works Contract Composition Scheme applicable from April 2007 to March 2011. The dispute specifically arose due to advance payments received during April to June 2007, before the scheme's implementation on 1-6-2007. Revenue argued that service tax was required on these advances under the Construction of Complex service, as the Works Contract Composition Scheme was not applicable. Consequently, a show cause notice was issued, demanding a substantial sum of &8377; 8,07,40,633/-, along with interest and penalties.

2. Circular Interpretation: The applicant's advocate cited Circular No. 128/10/2010-S.T., dated 24-8-2010, to support their case. The Circular clarified that if no service tax was paid on a project before 1-6-2007, the assessee could opt for the Works Contract Composition Scheme. Additionally, it was highlighted that as a partnership concern, the applicant was only required to pay service tax quarterly. Therefore, for the advance payments received in April and May 2007, liability arose post the scheme's enactment on 1-6-2007. The advocate affirmed that the applicant had fulfilled the entire liability under the Works Contract Composition Scheme, warranting admission of the appeal without further pre-deposit.

3. Revenue's Position: The Revenue's representative opposed the applicant's stance, contending that for receipts in April and May 2007, service tax should have been paid solely under the construction of residential complex service. It was argued that once a portion of the liability on a project was paid under this category, the applicant could not claim eligibility for the Works Contract Composition Scheme.

4. Tribunal Decision: After considering the arguments from both sides, the Tribunal found merit in the applicant's claim of eligibility for the Works Contract Composition Scheme. Acknowledging that the tax liability had been discharged as per the scheme's provisions, the Tribunal waived the pre-deposit of the remaining dues from the impugned order. Additionally, a stay was placed on the collection of these dues pending the appeal's disposal, thereby allowing the stay petition.