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2016 (5) TMI 1076 - AT - Service TaxValuation of taxable services where the benefit of abatement claimed - inclusion of value of the free supplies provided by the service recipient in the assessable value of the taxable service - claim of abatement of 67% in terms of Notification No. 18/2005-ST/ 1/2006-ST - cenvat credit on capital goods availed - benefit of Composition Scheme under works contract service on-going from prior to 01.06.2007. - Held that - switch over to Composition Scheme w.e.f. 01.06.2007 is not permitted in respect of projects on going from before 01.06.2007 - In the light of the analysis above, we set aside the impugned demand to the extent it arises as a consequence of denial of benefit of abatement of 67%. However the demand on account of the appellant not being eligible for the composition scheme (under WCS) in respect of projects which were ongoing from prior to 01.06.2007 is sustainable - Matter remanded back for quantification of tax liability - Decided partly in favor of assessee.
Issues:
1. Service tax demand confirmation for the period 01.03.2006 to 31.03.2008. 2. Inclusion of value of free supplies in assessable value. 3. Cenvat credit on capital goods. 4. Availing Composition Scheme under works contract service. 5. Invocation of the extended period for demand. Analysis: Issue 1: Service Tax Demand Confirmation The appeal was filed against the Order-in-Original confirming a service tax demand of ?6,10,37,554 for the period 01.03.2006 to 31.03.2008. The demand was based on the appellant's alleged failure to include the value of free supplies in the assessable value of taxable service and claiming abatement not entitled under Notification No. 18/2005-ST/1/2006-ST. Additionally, taking cenvat credit on capital goods and availing the Composition Scheme under works contract service were cited as reasons for the demand. Issue 2: Value of Free Supplies and Cenvat Credit The appellant contended that no cenvat credit on capital goods was taken for the projects in question. Referring to a previous case, it was argued that the value of free supplies need not be included for claiming abatement under the relevant Notifications. The Tribunal noted that the appellant had not provided evidence to show that the capital goods on which cenvat credit was availed were not used for the projects in question. Lack of prima facie evidence led to the conclusion that the appellant was eligible for the abatement. Issue 3: Composition Scheme under Works Contract Service The appellant admitted to switching to the Composition Scheme for Works Contract Services from 01.06.2007 for ongoing projects, which was not permitted for projects ongoing before the said date. The Tribunal acknowledged this admission and directed a reevaluation of the differential demand arising from the denial of the Composition Scheme benefit for projects ongoing before 01.06.2007. Issue 4: Extended Period Invocation The Tribunal found that the extended period for demand was not applicable due to the absence of willful misstatement or suppression of facts. The appellant was granted the opportunity to contest the imposition of the extended period and mandatory equal penalty during the reevaluation process. In conclusion, the Tribunal set aside the demand related to the abatement of service tax but upheld the demand concerning the ineligibility for the Composition Scheme under Works Contract Service for projects ongoing before 01.06.2007. The case was remanded for the calculation and confirmation of the differential demand, including interest and penalty aspects, with the appellant given the chance to present their case regarding the extended period and penalty imposition.
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