2019 (2) TMI 1101 - AT - Service Tax

Works contract service - composition scheme denied - period October 2007 to March 2012 - Demand of duty - Held that - The effect of exercising the option to pay tax in terms of composition scheme is to let the revenue know about such utilization of the scheme. Having reflected the same in their ST-3 returns Revenue becomes aware of the said fact thus justifying the fact of letting the revenue know about their option - Tribunal in the case of M/s Vaishno Asociates Vs Commissioner of Central Excise & Service Tax Jaipur-I 2018 (3) TMI 417 - CESTAT NEW DELHI has dealt with an identical issue and have observed that as the assessee started making payment of service tax under the composition scheme by reflecting the same in the return such fact would amount to exercise of option and the benefit cannot be denied for reason for failure to file intimation prior to payment of service tax under Works Contract Service - decided in favor of assessee. Input tax credit - Revenue has contended that inasmuch as the appellant has availed composition scheme it was not permissible to avail the Cenvat credit - Held that - Though the adjudicating authority has accepted the fact of reversal of the credit but he has not extended the credit by observing that the said credit was not reversed within the time limit prescribed for filing a revised ST-3 return - As per the settled law such reversal can be even at the appellate stage and as such would amount to non availment of credit. The expiry of the period of filing the revised ST-3 return has got no relation to the timing of reversal of credit. Demand of service tax - mobilization charges - Held that - lmost all the issues stands decided by one or other order of the Tribunal or of other judicial forum. The same are required to be examined as regards their applicability to the facts of the present case. For said purpose we set aside the impugned order and remand the matter to Commissioner for fresh decision in the light of law declared in various decisions. Appeal allowed by way of remand.

Summary

Issues Involved:
1. Applicability of Composition Scheme for Works Contract Service
2. Availment of Cenvat credit under Composition Scheme
3. Taxability of mobilization charges

Analysis:

Issue 1: Applicability of Composition Scheme for Works Contract Service
The appellant was engaged in providing services under the category of Works Contract and availing Cenvat credit for exempted services like Road Construction. The dispute arose regarding the payment of service tax under the Composition Scheme from October 2007 to March 2012. The appellant argued that by paying the duty under the scheme and reflecting it in their returns, they had effectively opted for the scheme. The Tribunal, citing a previous case, held that reflecting payment in returns amounted to exercising the option, settling the issue in favor of the appellant.

Issue 2: Availment of Cenvat Credit under Composition Scheme
A dispute arose concerning the appellant's availment of input tax credit while under the Composition Scheme. The Revenue contended that availing the scheme precluded Cenvat credit. The appellant reversed the credit, but the Revenue argued it was not within the prescribed time limit for filing revised returns. The Tribunal disagreed, stating that reversal could occur even at the appellate stage, leading to non-availment of credit, irrespective of the return filing deadline.

Issue 3: Taxability of Mobilization Charges
The service tax was confirmed on mobilization charges received by the appellant as advance payments from customers. The appellant argued that these charges were unrelated to any service as they paid interest to buyers. Citing a previous Tribunal case, the appellant contended that the charges were not taxable. The Tribunal noted that previous decisions needed examination for applicability to the present case. Consequently, the impugned order was set aside, remanding the matter to the Commissioner for a fresh decision based on relevant legal precedents, allowing the appellant to contest the issues before the adjudicating authority.