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TMI Blog2019 (9) TMI 1531X X X X Extracts X X X X X X X X Extracts X X X X ..... The eligibility to discharge tax under Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 on contracts that were in existence even before 1st June 2007 has been approved by the Tribunal in M/S B.R. KOHLI CONSTRUCTION PVT. LTD. VERSUS CST, NEW DELHI [ 2017 (4) TMI 38 - CESTAT NEW DELHI] where it was held that subject to fulfilment of the conditions, the appellants are eligible to discharge service tax on such works contract, after 1-6-2007, in terms of composition scheme of 2007. The charging of differential tax by denial of eligibility for the composition scheme is not correct in law - even on the ground of proper discharge of liability without recourse to the notification issued under section 11 C of Central Excise Act, 1944, the demand fails - Appeal allowed - decided in favor of appellant. - SERVICE TAX APPEAL NO: 87163 OF 2015 - FINAL ORDER NO: A/87590 / 2019 - Dated:- 12-9-2019 - MR C J MATHEW, MEMBER (TECHNICAL) AND MR AJAY SHARMA, MEMBER (JUDICIAL) Shri V Sridharan, Senior Advocate with Shri Vinay Jain, Advocate and Shri Aditya Jain, Chartered Accountant for the appellant Shri Dilip Shinde, Assistant Commissioner (AR) for the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the 10 contracts was ultimately transformed in the impugned order to application of the normal rate to all 35 contracts by denial of recourse to Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 on the finding that all were entered into before the new levy was introduced leading to the detriment in order in-original no. 08/ST-VII/RS/COMMR/2015-16 dated 29th June 2015 of Commissioner of Service Tax, Mumbai-VII that is now impugned before us. 4. Learned Senior Counsel submits that duty has been discharged by availing the benefit of notification no. 12/2003-ST dated 20th June 2003 in 25 of the contracts and 10 were assessed under the composition scheme for a total payment of ₹ 47,76,34,919 during the period of dispute of which, by denying the credit availed for payment, only ₹26,73,95,957 has been acknowledged as acceptable for discharge of the confirmed demand. He submits that, if the entire value including that of transmission towers were to be included in the determination of value as provided for in section 67 of Finance Act, 1994, the benefit of notification no. 45/2010-ST dated 20th July 2010, affording retrospective exemption up to 21s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issed. 7. The impugned order did consider the plea of the noticee therein for the benefit of notification no. 45/2010-ST dated 20th July 2010 but concluded that exemption granted under section 11 C of Central Excise Act, 1944 is contingent upon non-levy due to practice in the industry and that the assessee would not fall in that category. We take notice that the appellant herein had been discharging tax, either as provider of erection, commissioning and installation agency service or as provider of commercial or industrial construction service before paying the composition rate for works contract service in 10 of the contracts with spillover into the period after this was made taxable. By the impugned proceedings, the jurisdictional tax authorities sought to place the assessment, and discharge of tax liability, by the appellant in jeopardy and, by part denial of the classification claimed by them as well as by inclusion of the value of the towers in the assessable value, confirmed demand for the entire period of dispute to erase the discharge thereof. The appropriation of the amount paid till then is tantamount to deeming such payment to be a tentative deposit and not th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... technical testing and analysis would constitute the activity of transmission and distribution by the service provider to the service receiver; and such service would be squarely covered under exemption provided under this notification. The earlier decision in M.P. Power Transmission Co. Ltd. was affirmed. Therefore, we find no reason to deny the claim of benefit of notification no. 45/2010-ST dated 20th July 2010 as arising from the proceedings initiated and concluded by the adjudicating authority. 9. It is seen that the adjudicating authority has accepted the computation of tax liability of ₹ 49,12,81,797 pertaining to the tax discharged under two of services existing prior to 1st June 2007. For the period between May 2007 and March 2009, total billing of ₹ 538,80,93,109 was, after abatement of value of goods/materials amounting to ₹348,39,74,000, was reduced to ₹ 190,41,19,109 on which tax of ₹ 353,49,122 was held as liable. With the decision of the Hon ble Supreme Court in re Larsen Toubro Ltd, the legality of levy of tax on composite contract, by recourse to entry for services simpliciter that existed prior to incorporation of section 65 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... indivisible, composite works contract prior to 1-6-2007. As such, subject to fulfilment of the conditions, the appellants are eligible to discharge service tax on such works contract, after 1-6-2007, in terms of composition scheme of 2007. The reason for denial of the benefit recorded in the impugned order is not sustainable. We find, considering the facts and circumstances of the case, the imposition of penalties on the appellant is not justified. The tax liability of the composite works contract has been a subject matter of large number of litigations and the final legal position was clarified only after the decision of the Hon ble Apex Court, as above. In such situation, no penalty can be imposed on the appellant, especially when they have discharged service tax in terms of the provisions, as applicable during the relevant time and as per the understanding of such provision during the relevant time. As noted above, the appellants only contested this differential duty and penalties. No other issue is pressed during the submission by the appellant. Accordingly, we allow the appeal with reference to this differential service tax and the penalties. The appeal is accordingly disposed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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