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TMI Blog2018 (9) TMI 1450X X X X Extracts X X X X X X X X Extracts X X X X ..... The composition scheme for payment of the service tax was primarily meant to facilitate the service tax provider that they need not to bother with regard to bifurcation of supply and service element from the composite work contracts rather they were allowed to discharge their service tax liability on the concessional rate - From the perusal of the Rule 3 (i), it is clear that for determination of the value under the composition scheme, the value of all goods used in or in relation to execution of the work contract need to be included in the serviceable value even when the goods might have been supplied under any other contract for execution of the composite work contract. It is a matter of record in this case that all the contracts are composite contracts for both supply of goods and services as both the elements are absolute pre-requisite for completion of any turnkey project. It is also of the matter of fact that the respondent/assessee has opted for the benefit of composite work contract service and has availed the benefit of Rule 3 (i) of Work Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 - thus, the value of both supply and service need to be added f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce Act, 1994 has also invoked. The basic contention of the department has been that since the contracts given to the respondent/assessee by various electricity departments are primarily composite contracts and the service tax @ composite scheme (4.12%) was only available when the value of services alongwith the value of supply of goods is included in the service taxable value of the service. The matter was adjudicated by the Commissioner who vide his order dated 10/06/2015 has set aside the show cause notice and the allegations as raised in the show cause notice have not been upheld by the learned Commissioner. Feeling aggrieved by the above impugned order of the Commissioner, the department is in appeal before us alleging that the order-in-original is not legal and proper and therefore same has been reviewed by Competent Authority under Section 86 (2) of the Finance Act, 1994. It has been the contention of the department that the respondent/assessee by splitting the single work contract into separate contracts had evaded payment of service tax and Adjudicating Authority has failed to appreciate the respondent were engaged in business of execution of EPC contracts pertaining to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... will be classified as Works Contract wherein the transfer of property in goods involved in the execution of such contract is leviable to tax as sale of goods. The noticee had well accepted the EPC projects as Works Contracts but had just contrived to split the execution of Works Contract into two parts and ignoring the fact that evidence was writ large against them in as much as the noticee itself was the service provider, they themselves had supplied/sold the material which was to be used by them in the execution of impugned Works Contracts. Therefore, the impugned Works Contracts are well within the framework of Composition Scheme and liable to tax as per the value as prescribed under Rule 3 of the Work Contract (Composition Scheme for Payment of Service Tax) Rules, 2007, as amended. 5. It has also been contended by the Department that this Tribunal in its final decision in appeal nos. ST/52612-52614 of 2014 in the case of M/s Jindal Water Infrastructure Ltd. vs. CCE ST, Rohtak 2018 TIOL 1153 CESTAT DEL. has already held that in case of the composite work contract, the value of the goods as well as services need to be added if benefit of reduced rate of service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to discharge their service tax liability on the concessional rate. The relevant Rule 3 (i) of the Composition Scheme (supra) is reproduced here below :- 3 (1) Notwithstanding anything contained in Section 67 of the Act and rule 2A of the Service (Determination of Value) Rules, 2006, the person liable to pay service tax in relation to works contract service shall have the option to discharge his serviced tax liability on the works contract service provided or to be provided, instead of paying service tax at the rate specified in Section 66 of the Act, by paying an amount equivalent to (four percent) of the gross amount charged for the works contract. Explanation For the purposes of this sub-rule, gross amount charged for the works contract shall be the sum, - (a) including (i) the value of all goods used in or in relation to the execution of the works contract, whether supplied under any other contract for a consideration or otherwise; and (ii) the value of all the services that are required to be provided for the execution of the works contract ; (b) excluding (i) the value added tax or sales tax as the case may be paid on transfer of prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a set of Technical Specifications ‟ pertaining to both the contracts which is referred as Section III to the supply contract and the erection contract. The Technical Specifications‟ document is common to both the contracts and it is in the form of a Contract Document Between RWPL M/s Jindal Water Infrastructure Limited for Raw Water Pipe work and Pumping System duly signed by the representatives of the assessee and M/s Raj West Power Ltd. 49. I find that the assessee opted to pay service tax on the amounts received by it under the Erection Contract under the Composition Scheme provided under Works Contract Service‟. However, as per the stipulation contained in Rule 3 (1) of the Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 Service Tax was to be paid on the gross amount charged for the said works contract including the cost of materials used (i.e. supply contract) but the assessee did not pay service tax on the amounts received by it under the supply contract . 10. Similar analysis was made in respect of Sitarganj Project also. We have examined the terms of both the contracts entered into by the appellant for Barmer P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... implication of the course of action for discharging service tax by them. 12. The appellants contested the demands on limitation. We have perused the impugned order on this aspect. It is clear from the facts narrated above that the appellant is fully aware of the legal implications of service tax liability on composite works contract. Their act of first paying composition rate on what is claimed to be a service contract and later switching over to full rate of payment without composition clearly reveals the knowledge and deliberate intend of the appellant. We are not convinced with the claim of bonafideness on the part of the appellant in the present appeals. We have no reason to interfere with the findings either on merit or on limitation. Accordingly, we dismiss these appeals . 10. In view of above we hold that the : (i) impugned order is without any merit and we set aside the same ; (ii) we remand back the matter to the original Adjudicating Authority for purpose to verify the claim of the respondent/assessee in his arguments submitted before this Tribunal that on certain contracts they have paid full rate of service tax rather than concessional rate of service tax u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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