2018 (9) TMI 501 - AT - Service Tax

Works Contract services - Department alleged short / non payment of Service Tax resulting in Show Cause Notice dated 9.9.2011 which raised a demand for ₹ 49,12,051/- along with interest at appropriate rate and proportionate penalty - Composition Scheme - Held that - It is admitted fact that option is filed prior to making payment which is only the mandate of Composition scheme under Rule 3(3) of 2007 Rules thereof - The sole plea of the department that option has not been exercised, is therefore found not tenable. Benefit of cum tax - Held that - The Commissioner (Appeals) while confirming the penalty has considered the plea of the department about the delayed payment amounting to suppression. Appeal dismissed.

Summary

Issues:
Appeal against order alleging non-payment of Service Tax, benefit of composition scheme, exercise of option under Rule 3(3) of Composition Scheme, cum tax benefit, suppression of facts leading to penalty.

Analysis:
The appeal was filed against an order alleging non-payment of Service Tax by the appellant engaged in construction activities. The department raised a demand for payment along with interest and penalty. The initial adjudication held the services to be 'works contract services' and 'commercial and industrial construction services', dropping the demand for non-commercial construction pre-1.6.2007. The demand was confirmed at a reduced amount in subsequent orders. The department appealed against further reduction. The main contention was the benefit of the composition scheme granted to the appellant. The department argued that the appellant failed to file the option within the required timeframe and that the value of the contract did not include all taxes, challenging the order.

During the hearing, the respondent argued that they had indeed exercised the option for the composition scheme within the stipulated time frame, supported by letters and acknowledgments from the department. They emphasized their registration for 'works contract services' and their compliance with tax liabilities under the composition scheme, including the value of goods. The respondent cited previous judgments to support their case.

After reviewing the arguments and records, the Tribunal found that the department did not challenge the nature of services provided by the appellant as 'works contract services'. The only dispute was regarding the composition scheme benefit due to alleged non-exercise of the option. The Tribunal noted communication by the appellant to the department before payment under the scheme, finding no fault in the Commissioner's decision to grant the benefit. Citing precedents, the Tribunal upheld the Commissioner's findings, emphasizing that the option was exercised before payment, as required by the Composition Scheme rules.

Regarding the cum tax benefit and penalty for delayed payment, the Tribunal found no issues with the Commissioner's decision and upheld the penalty for suppression of facts. Consequently, the Tribunal dismissed the appeal, affirming the impugned order in its entirety.