2024 (3) TMI 454 - AT - Service Tax

Works Contract Scheme - Appellant has failed to file any letter indicating their option to opt for Composition Scheme - time limitation - HELD THAT - This Bench in the case of M/S HEAVY ENGINEERING CORPORATION LIMITED VERSUS COMMISSIONER OF CGST EXCISE, RANCHI 2023 (3) TMI 1393 - CESTAT KOLKATA has held Admittedly, no demand has been made for the period prior to 01.06.2007 under the Works Contract Service . Therefore, the demand of service tax from the appellants does not survive prior to 01.06.2007 - Therefore, the demand for the period October 2005 to 31/5/2007 is set aside. The Appellant would be eligible for consequential relief, if any, as per law. Demand for the period 01/06/2007 to March 2010 - Time limitation - HELD THAT - The Appellant has been paying the Service Tax under the category of Works Contract under Composition Scheme and reflecting the same in the ST-3 Returns. The Department did not raise any query about the same till the present Show Cause Notice was issued on 08/2/2010 - Admittedly, the Appellant s main business is to supply the Fire Equipment and erect and Commissioning the same in the premises. Therefore factually it gets proved that they were providing Works Contract Service only. If the Appellant is not paying VAT on the same, it is for the VAT Authority to take proper action against them. This cannot be the basis for confirmation of the demand by the Service Tax Authorities. Therefore, the confirmed demand on account of Works Contract , wherein the benefit of composition was not given, is also required to be set aside on account of limitation. No penalties are to be imposed. In case, any excess Service Tax has been paid by the Appellant, the same is required to be refunded as per statutory provisions. Appeal disposed off.

Summary

Issues involved:
1. Classification of services for Service Tax payment.
2. Time limitation for issuing Show Cause Notice.
3. Applicability of Composition Scheme for Works Contract Services.

Issue 1: Classification of services for Service Tax payment
The Appellants supplied Fire Safety Equipment and undertook the erection and commissioning under a single contract. Initially, their Service Tax Registration was issued for "Security Agency Service" instead of "Fire Security Services". After rectification, Works Contract Services were included. The Show Cause Notice alleged non-payment of Service Tax under different categories. The Appellant argued that the quantification of demand was erroneous and relied on precedents to support their case. They contended that they had opted for the Composition Scheme, as evidenced by filing ST-3 Returns. The Tribunal found in favor of the Appellant for the period prior to June 2007, setting aside the demand. For the subsequent period, the Appellant was directed to pay Service Tax as per Works Contract rates under the Composition Scheme.

Issue 2: Time limitation for issuing Show Cause Notice
The Appellant argued that the Show Cause Notice issued for the period prior to June 2007 was time-barred as the service provided could not have been taxed before that date. They maintained that proper filing of ST-3 Returns reflected their compliance with Works Contract Service taxation post-June 2007. The Tribunal agreed, setting aside the demand for the extended period on the grounds of limitation.

Issue 3: Applicability of Composition Scheme for Works Contract Services
The Adjudicating Authority noted the Appellant's failure to show payment of VAT on raised invoices and denied the Composition Scheme benefit. The Authority upheld the confirmed demand, citing applicable Service Tax rates. However, the Tribunal ruled in favor of the Appellant, emphasizing that they were indeed providing Works Contract Services. The Tribunal directed the Adjudicating Authority to quantify the Service Tax payable under the Composition Scheme for the period from July 2007, ensuring any short payments are rectified without penalties. Any excess payments were to be refunded as per statutory provisions.