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TMI Blog2024 (6) TMI 303X X X X Extracts X X X X X X X X Extracts X X X X ..... suppression on the part of the appellant. The entire figures have been taken from the accounts of the appellant and the Department reclassified the services under WCS. The appellant has correctly discharged service tax and the allegation is only with regard to the classification of the construction services - The demand for the period April 2012 to June 2012 would fall within the normal period and the appellant is required to pay service tax for this period under the category of WCS. Benefit of composition scheme denied - HELD THAT:- The demand raised by the department @ 12% denying abatement and composition scheme is not sustainable. The reason for denying the benefit of composition scheme is that the appellant has not obtained permission from the Department for applying composition scheme. When the appellant has classified the services under construction of Complex Services, there is no situation that appellant would apply for permission to adopt composition scheme - The Tribunal in the case of ABL Infrastructure Pvt. Ltd. Vs CCE Nashik [ 2015 (2) TMI 801 - CESTAT MUMBAI ] has held that even if the assessee has not obtained permission from the Department for opting the compositio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t from value, as per Notification 1/2006 ST Dt. 01.03.2006. It is the allegation of the department that the activities undertaken by the appellant involves transfer of property in goods and hence merits classification under Works Contract Service, as defined under Section 65 (105) (zzzza) of the Finance Act, 1994. Under Works Contract service, in order to levy Service Tax only on the service component of the works contract, two methods have been prescribed; Method (i) Rule 2 A of the Service Tax (Determination of Value) Rules, 2006, by which, from the gross amount, the value of transfer of property on actual basis (value on which VAT is paid) to be excluded and on the remaining value, Service Tax at appropriate rate has to be paid; Method (ii) Under Works Contract (Composition scheme for payment of Service Tax) Rules, 2007 - Service tax can be paid at a reduced rate of 4 % on the gross amount. While quantifying the service tax after classifying the services under WCS, the department has not given any abatement or reduction as to the value of materials which forms part of the consideration received by appellant. The department has alleged that the appellant had neither furnished the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... returns, by indicating the category of service and the benefit of abatement claimed. Thus, the appellant had not suppressed any facts from the knowledge of the department. The issue is purely one of interpretation of classification of service. 2.3.2 The CBIC itself has issued a circular bearing No. 98/1/2008 ST Dt. 04.01.2008, wherein it has been clarified that ongoing contracts, which were classified under CICS / CCS prior to introduction of works contract service, shall continue to be classified under CICS / CCS and vivisecting a single composite service and classifying the same under two different taxable services depending upon the time of receipt of consideration is not legally sustainable. Though this was stated in the context of ongoing contracts as on 01.06.2007, it led to a belief that such construction activities can be classified under CCS even after 01.06.2007 also. Thus the invocation of extended period of demand is not at all sustainable in this case and hence the demand upto March 2012 is hit by time bar, as tabulated below: Period Relevant date, i.e the due date for filing ST3 Normal period would end on (SCN issued on 15.04.2014) April 2009 to Sep 2009 25.10.2009 24 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Union Government cannot levy Service Tax on the value of transfer of property in goods, which falls within the exclusive domain of the State Governments as per S.no. 54 of List II of seventh schedule to the Constitution. In other words, the failure of the appellant to opt for the compositions scheme cannot enable the Union Government to levy Service Tax on value of transfer of property in goods, which is constitutionally impermissible. In this connection reliance is placed on the decision of the Hon ble Supreme court in the case of BSNL Vs UOI 2006 (2) STR 161 (SC). 2.4.2 If the benefit of composition scheme is extended, the appellant s service tax liability for the period April 2012 to Mar June 2012 (which is within the normal period of demand) would be as below: Gross amount received : Rs.1,39,75,813 Taxable value under CCS : Rs.46,12,018 (after 67 % abatement) Service tax paid @ 12.36% : Rs.5,70,045 Service Tax payable under composition Scheme @ 4.12 % on gross amount : Rs.5,75,804 Tax payable : Rs.5,759 2.4.3 In the following cases it has been held that the benefit of composition scheme has to be extended, even if the taxpayer has not opted for the same: (i) Bridge Roof Co. (I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ruction services and only by the decision of the Hon ble Apex Court in the case of Commissioner of C.Ex Cus., Kerala Vs Larsen Toubro Ltd. 2015 (39) S.T.R 913 (SC), it was settled that composite contracts can be classified only under WCS. The appellant had classified the services under CCS on bonafide belief and had discharged service tax by availing abatement under Notification No.1/2006-ST. The appellant has thus paid service tax on 33% of the consideration received. It is indeed correct that the issue of classification of construction services was doubtful and the issue of classification of services being interpretational in nature, we are of the view that the demand raised for the extended period cannot sustain and requires to be set aside. The department has not brought out any positive act of suppression on the part of the appellant. The entire figures have been taken from the accounts of the appellant and the Department reclassified the services under WCS. The appellant has correctly discharged service tax and the allegation is only with regard to the classification of the construction services. 8. The demand for the period April 2012 to June 2012 would fall within the norma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 appearing for the Revenue, we find that the Revenue s main objection is absence of option exercised by the appellant before they started paying duty under the works contract. However, we find that as the appellant applied for registration under works contract, the same amount would amount to exercise of option in the absence of any format laid in the said rule for exercising said option. Similarly, we find favour in the appellant s contention that the restriction under Rule 3(3) of the said rules is for availing credit in respect of input and not input service. We have also seen Board s Circular and the judgment of Nagarjuna Construction (supra) relied upon by Revenue. The facts there are different because there the situations were ..... X X X X Extracts X X X X X X X X Extracts X X X X
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