2018 (1) TMI 1135 - AT - Service Tax

Erection, commission or installation service - abatement under Composition scheme - Held that - there is no service tax liability on composite works contract service prior to 01/06/2007 - on this composite works contract, the appellant were discharging service tax w.e.f. 01/06/2007 - no tax liability will arise on such service irrespective of the date of receipt of consideration for the same - appeal allowed.

Summary

Issues:
1. Applicability of composition scheme for service tax on advance consideration received prior to 01/06/2007.
2. Tax liability on services rendered under a composite works contract prior to 01/06/2007.
3. Discharge of service tax under works contract service availing composition scheme during 2009.
4. Interpretation of legal and factual findings regarding tax liability on composite works contract service.

Analysis:
1. The appeal challenged an order by the Commissioner of Central Excise, Jaipur, regarding the appellant's eligibility to avail the composition scheme for service tax on advance consideration received before 01/06/2007. The appellant, engaged in construction activities, had entered into an agreement for constructing a power plant and had paid service tax under the works contract service category during April 2009 to September 2009. The Revenue contended that the composition scheme could not be availed for consideration received before 01/06/2007, leading to a demand for differential service tax. The appellant argued that no tax liability arises for services rendered under a composite works contract prior to 01/06/2007, as confirmed by the Hon'ble Supreme Court in a relevant case.

2. The dispute centered on the tax liability on services provided by the appellant under the composite works contract before 01/06/2007. The appellant contended that no tax liability exists for services rendered before 01/06/2007 under a composite works contract, even if service tax was discharged belatedly under the works contract service category. The tribunal noted that based on factual and legal findings, the appellant was discharging service tax from 01/06/2007 onwards, and no tax liability existed on services provided before this date, as per the Supreme Court decision cited.

3. The appellant had discharged service tax during 2009 under the works contract service category, availing the composition scheme, albeit at a rate of 4% instead of 2%. The tribunal considered the argument that having paid service tax under works contract service during 2009, the appellant could not claim that the services were not taxable at all. This aspect was crucial in determining the appellant's compliance with the tax regulations and schemes during the relevant period.

4. The tribunal analyzed the legal and factual findings regarding the tax liability on the composite works contract service provided by the appellant. It was established that no tax liability arose for services rendered before 01/06/2007, regardless of the date of receiving consideration for the same. The tribunal concluded that the impugned order lacked merit based on the discussion and analysis presented, ultimately setting it aside and allowing the appeal in favor of the appellant. The decision was made in alignment with the legal principles and precedents cited during the proceedings.