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TMI Blog2024 (3) TMI 986X X X X Extracts X X X X X X X X Extracts X X X X ..... required under rule 2A of the Service Tax (Determination of Value) Rules 2006 [the 2006 Rules] . The appellant was, therefore, called upon to show cause why service tax of Rs. 8,82,94,759/- should not be recovered from the appellant under the proviso to section 73 (1) of the Finance Act, 1994 [the Finance Act] with interest and penalty. 3. The appellant filed a detailed reply to the show cause notice pointing out it was entitled to the benefit under the Composition Scheme and also pointed out that there was no requirement of separately filing any intimation to the department for payment of service tax under the Composition Scheme and the fact that the appellant deposited service tax at the rate of 4.12 percent and submitted the returns on the basis of the Composition Scheme was sufficient intimation contemplated under rule 3(3). 4. The Commissioner, however, did not accept the contention advanced by the appellant. The Commissioner found that though the show cause notice had referred to nine work orders in respect of which the appellant had not submitted prior intimation for availing the benefit of the Composition Scheme, but as the appellant had submitted declarations in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rule 3(3) of the Composition Scheme, the Bench observed: "The above Rule requires that the provider who opts to pay tax under the Rule shall exercise such option prior to payment of Service Tax. We find force in the appellant's contention that the fact that they had started paying tax under the Works Contract Composition Scheme is quite evident from the rate of tax reflected in the ST-3 returns. In any case, they had exercised option on 26-9-2007, the substantial benefit cannot be denied for procedural deficiency of delay in opting for Works Contract Service by a specific declaration under Rule 3. More so, when no format has been prescribed for making/exercising an option nor has it been specified as to whom the option must be addressed. We agree that the fact of paying Service Tax at the composition rate in the returns filed by them, is enough indication to show that they have opted for payment under the Works Contract Composition Scheme. Reliance is placed on the case of Bridge and Roof Company (supra), wherein it was held as under:- "After hearing both sides, duly represented by Shri Bipin Garg, learned Advocate appearing for the appellant and Shri K.K. Jaiswal, learned AR a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld be construed as exercising the option. We note that the facts in respect of each one of the contracts now under contest requires verification with original documents. Accordingly, the matter has to go back to the Original Authority to apply the above ratio and to give a final finding regarding eligibility of the appellant/ assessee for such composition in respect of works contract service, post 01/06/2007." (emphasis supplied) 12. The Calcutta High Court in Larsen & Toubro also examined the issue and observed as follows: "10. Thus, Rule 3(1) of the scheme gives an option to the person liable to pay service tax to discharge his service tax liability in terms of the scheme by paying an amount equivalent to 2% of the gross amount charged for the works contract. Sub-rule (3) of Rule 3 states that a person who opts to pay service tax under the composition scheme shall exercise such option prior to payment of service tax and the option so exercised shall be applicable for the entire works contract and shall not be withdrawn until the completion of the said works contract. The argument of the department is that the option to pay service tax under the composition scheme shall be e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. Admittedly no procedure has been laid down under the rule and there is no statutory form for exercise of such option. This has been held so by Learned Single Bench, against which the revenue are not on appeal. In the absence of statutory format can the department be heard to say that the option should be exercised in a particular fashion and cannot be by conduct, that is by paying the service tax equivalent to 2% of the gross amount charged for the works contract." (emphasis supplied) 13. After referring to the decisions of the Madras High Court in T. Azhakesan vs. State Tax Officer and Others [2021 SCC Online Mad 10505] and GE T and N India Limited vs. Commissioner of Central Excise and Service Tax Payer Unit, Chennai [2020 (34) GSTL 176 (Mad.)] and also the decision of the Tribunal in ABL Infrastructure, the Calcutta High Court in Larsen & Toubro further held as follows: "15. xxxxxxxx. Thus, it can be safely held that the payment of tax under the composition scheme upon notification of the scheme vide a Notification No. 32 of 2007, dated 26-5-2007 by filing the return and paying tax at the compounded rate of 2% is sufficient compliance of exercise of option under the sche ..... X X X X Extracts X X X X X X X X Extracts X X X X
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