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TMI Blog2014 (5) TMI 106X X X X Extracts X X X X X X X X Extracts X X X X ..... hmedabad, issued a show cause notice on 23.10.09 alleging inter alia that : "The Service Tax short paid by them on all the projects wherein service tax was paid by them under Commercial or Industrial Construction Service or under Construction of Complex Service but subsequently, switched over to Works Contract Service w.e.f. 01.06.2007, a chart is annexed with this notice containing such details for the period from 1.8.2008 to 28.2.2009 & 1.3.2009 to 31.7.2009. Accordingly, the total taxable value collected by them on the 9 ongoing projects from 1.8.2008 to 28.2.2009 comes to Rs.37,42,70,933/and for the period from 1.3.2009 to 31.7.2009 comes to Rs.18,39,05,451/. In other words, the taxable value collected by them during the period from 01.08.2008 to 31.07.2009 comes to Rs.55,81,76,444/on which they had paid Service Tax 2,29,96,870 with Ed. Cess @ 4.12% after deducting the Sales Tax/VAT." Xxxx xxxx "The department vide a letter dated 20.10.2009 called for the details pertaining to completion and finishing services in relation to building or civil structures as referred to in sub-clause (c) of clause (25b) of Section 65 of the Finance Act and as per Circular issued by CBEC vide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est at appropriate rate for delayed payment of Service Tax, should not be demanded and recovered from them under section 75 of the Finance Act, 1994; 3. Penalty should not be imposed upon them under sections 76 & 78 of the Finance Act, 1994, for contraventions mentioned in foregoing paras." After hearing the appellant, the Commissioner passed an order dated 29.10.2010. In such order, he framed the following two issues: "3.2 The issue to be decided in the case before me is: (i) Whether the action of M/s.JMC in switching over from "Commercial or Industrial Construction Service" and "Construction of complex service" to "Works contract service" for those projects which were already under execution as on 1.6.2007 and a part service tax was paid before switching over to "Works contract service" was in accordance with the Act and the rules made there under? (ii) And whether the benefit of payment of service tax at concessional rate of 2% w.e.f. 1.6.2007 (4% from 28.2.2008) under "Work Contract (Composition scheme of payment of Service Tax) Rules, 2007, on the said ongoing projects as opted by them was in accordance with the Act and the rules made thereunder?" He held and observed as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of complex service". In the same manner as they did prior to enactment of "Works contract service" for the 9 ongoing projects. b) For all the 9 ongoing projects, since payment of service tax had begun prior to 1.6.2007, the benefit of payment of service tax at concessional rate of 2% w.e.f. 1.6.2007 (4% from28.2.2008) under "Work Contract (Composition scheme of payment of Service Tax) Rules, 2007 was not available to M/s.JMC." On such basis he confirmed the demand of tax, interest and penalty payments as indicated in the show cause notice. In Tax Appeal No.386 of 2014, with minor variations, facts are similar. In this case, the same assessee for a different period received a show cause notice dated 22.10.2008 from the Commissioner. In such show cause notice, it was conveyed as under: "6.7 In light of the said facts, it appears that all said 34 contracts of M/s JMC were under execution as on 01.06.07 and service tax on all said contracts was being paid on the consideration received. As per sub-clause 3 of the rule 3 of Works Contract Composition Scheme for Payment of Service Tax Rules, 2007 benefit of payment of service tax at concessional rate of 2% was not available on such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 012 (28) STR 561 (SC). On the basis that such decision was not available before the adjudicating authority at the time of passing of the orders and also on the ground that the said authority had not considered para 2 of the circular of the Board dated 24.8.2010, which was binding on him, and further that the issue of free supply of goods or sale of goods in a works contract and its inclusion in the assessable value is required to be examined in light of the judicial pronouncements, the Tribunal remanded the proceedings for de novo consideration after affording an opportunity of personal hearing to the appellants. We may reproduce the relevant part of the Tribunal's judgment as under: "6.1 In view of the above clarification the view taken by the Adjudicating authority is not correct that appellant was not entitled to revise the classification to 'Works Contract Services'. The first show cause notice dated 22.10.2008 and its corrigendum dated 29.09.2009, were mainly targeted to deny the benefit of Composition Scheme to the appellant land to determine the taxable value as per Rule 2A of the Service Tax (Determination of Value) Rules, 2006 read with section 67 of the Finance Act, 1994 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce, therefore, the matter is required to be remanded back to the Adjudicating authority to decide the cases afresh in denovo proceedings by affording an opportunity of personal hearing to the appellant to explain their stand. 7. In view of the above observations, appeals filed by the appellants are allowed, to the extent indicated hereinabove, by way of remand to the Adjudicating authority." It is this judgment which the assessee has challenged before us. Learned counsel for the appellant vehemently contended that the Tribunal committed a serious error in remanding the proceedings to the Commissioner. The show cause notice proposed to levy tax only considering the service provided by the assessee as commercial or industrial construction services or complex services. When the Tribunal held that no such tax could be levied, thereafter no question of remanding the proceedings arise. He submitted that the question of denying the benefit of composition was not involved at all. The department not having made it part of the show cause notice, no tax could be levied on such basis. He submitted that the department cannot travel beyond the show cause notice. In support of such contentions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an option is made, it is applicable for the entire contract and cannot be altered. Therefore, in case a contract where the provision of service commenced prior to 01.06.2007 and any payment of service tax was made under the respective taxable service before 01.06.2007, the said condition under rule 3(3) was not satisfied and thus no portion of that contract would be eligible for composition scheme. On the other hand, even if the provision of service commenced before 01.06.2007 but no payment of service tax was made till the taxpayer opted for the composition scheme after its coming into effect from 01.06.2007, such contracts would be eligible for opting of the composition scheme." The combined effect of the said classification is that after 1.6.2007, with introduction of the new entry of works contract service, it would be open for an assessee to change the classification provided he satisfied the requirements. However, for the ongoing projects as on 1.6.2007, if any payment of service tax was made under the respective taxable service before the said date, qua such contract, composition scheme would not be available. Such a view has also been upheld by the Supreme Court in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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