2020 (4) TMI 147 - AT - Service Tax

Change in classification of service - Construction of Complex Service to Works Contract Composition Scheme - Revenue dispute tax paid under Composition Scheme, on the ground that as the appellant was paying Service Tax on the same work prior to 01.06.2007 under the Head Construction of Complex Service and hence, they cannot change their classification w.e.f. 1st June, 2007 - HELD THAT - Reliance placed in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS 2015 (8) TMI 749 - SUPREME COURT where it was held that that in case of composite contract, the classification will be only under the head Works Contract Service. The impugned order against the appellant demanding Service Tax short-paid stands set aside - Appeal allowed - decided in favor of appellant.

Summary

Issues involved:
Classification of service tax under the "Works Contract Composition Scheme" from June 1, 2007, dispute regarding payment under the scheme, applicability of classification change, interpretation of prior tax payments, reliance on Supreme Court ruling.

Analysis:
The case involved a dispute regarding the classification of service tax under the "Works Contract Composition Scheme" from June 1, 2007. The appellant had been paying tax on a service component and claiming abatement towards the material component until May 31, 2007. However, from June 1, 2007, the appellant opted to pay service tax under the composition scheme on the gross amount, including the material component. The Revenue disputed this change, arguing that the appellant could not change their classification as they were paying service tax under a different category before June 1, 2007.

During the proceedings, the Authorized Representative for the Revenue relied on the impugned order. However, upon considering the submissions and examining the impugned order, the Tribunal found that the issue was covered in favor of the appellant by a ruling of the Supreme Court in the case of L&T. The Tribunal noted that the Supreme Court had held that in the case of a composite contract, the classification would be only under the head of Works Contract Service.

As a result, the Tribunal allowed the appeal in favor of the appellant, with any consequential benefits, if applicable. The impugned order demanding service tax that was short-paid by the appellant was set aside based on the interpretation of the Supreme Court ruling regarding the classification of service tax under the Works Contract Service category for composite contracts.

The judgment was dictated and pronounced in open court on February 24, 2020, by the members of the Tribunal.