2017 (11) TMI 1334 - AT - Service Tax

Composite Works Contract - case of Revenue is that the nature of contract has to be examined for a specific determination whether they are really falling under composite works contract - tax liability post 01/06/2007 under works contract service, eligibility of the appellant/assessee to pay tax after availing the composition scheme is under dispute - Held that - the facts in respect of each one of the contracts now under contest requires verification with original documents - matter on remand for tax liability to be requantified for the period after 01/06/2007 on satisfactory verification of the documents regarding the claim of the appellant /assessee on classification of services under works contract service and with reference to eligibility of the appellant/assessee to pay service tax after availing the concessional rate under composition scheme for works contract service - appeal allowed by way of remand.

Summary

Issues:
Appeal against common impugned order dated 05/10/2011 of Commissioner of Central Excise, Jaipur - I regarding service tax liability on various contracts executed by the assessee/appellant engaged in construction business.

Analysis:
The assessee/appellant contended that contracts prior to 01/06/2007 are not liable to service tax based on the law laid down by the Hon’ble Supreme Court in CCE & CUS, Kerala Vs. Larsen & Toubro Ltd. The Original Authority confirmed tax liability under different categories for contracts pre and post 01/06/2007. The appellant argued they are liable to pay service tax only from 01/06/2007 under the composition scheme. Disputes regarding tax liability of composite works contracts were resolved by the Supreme Court's decision in Larsen & Toubro Ltd. The appellant raised concerns about demands issued invoking extended periods and penalties.

The Revenue argued that the nature of contracts must be examined to determine if they fall under composite works contracts. They contended that the claim for composition scheme under works contract service is not tenable without proper intimation of option. The Revenue also highlighted non-registration and non-filing of returns as grounds for penalties.

The Tribunal agreed with the appellant that composite works contracts are not liable for service tax pre-01/06/2007 based on the Larsen & Toubro Ltd. case. For tax liability post 01/06/2007, eligibility under the composition scheme was disputed. The Tribunal referenced a previous case to determine that starting to pay tax after availing concession can be considered as exercising the option. The matter was remanded to the Original Authority for verification of documents regarding classification and eligibility for the composition scheme.

Regarding the demand limitation, the Tribunal found that disputes regarding tax liability and quantification were resolved by the Supreme Court's decision. They deemed it unsustainable for the Revenue to invoke extended periods for such services, limiting the demand to the normal period of limitation. The liability to penalties was to be examined by the Original Authority based on the findings.

The Tribunal concluded that the impugned order was not sustainable and remanded the case for a fresh decision. The main issues to be examined included the tax liability post 01/06/2007 and the eligibility for the composition scheme. The appellant was to be given an opportunity to present supporting documents, and the appeals were allowed by way of remand.