Custom, Excise & Service Tax Tribunal
Sunraj Construction vs Commissioner Of Central Excise & ... on 9 September, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI COURT No. I Appeal No. ST/611/11 (Arising out of Order-in-Appeal No. AGS/378/NGP/2011 V(2) 56-ST/NGP/APPL/2011/1346 dated 27.08.2011 passed by Commissioner of Central Excise & Customs (Appeals), Nagpur) For approval and signature: Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. C.J. Mathew, Member (Technical) ================================================
1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the : No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Seen of the Order?
4. Whether Order is to be circulated to the Departmental : Yes authorities?
Sunraj Construction Appellant Vs. Commissioner of Central Excise & Customs Mumbai Respondent Appearance:
Shri A.S. Dani, C.A. for appellant Shri A.B. Kulgod, Asst. Commr (AR) for respondent CORAM:
Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. C.J. Mathew, Member (Technical) Date of Hearing: 09.09.2015 Date of Decision: 09.09.2015 ORDER NO Per: M.V. Ravindran This appeals is directed against Order-in-Appeal No. AGS/378/NGP/2011 V(2) 56-ST/NGP/APPL/2011/1346 dated 27.08.2011.
2. Heard both sides and perused the records.
3. The issue involved in this case is regarding the differential service tax liability on the services rendered by the appellant during the period 2008-09 under the category of works contract services.
4. Learned C.A. would take us through the entire case records and submit that the lower authorities have erred in confirming the demands raised by them. It is his submission that the appellant had opted for discharging the service tax liability on the works contract services by opting to pay the taxes under Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 (herein after referred to Composition Scheme) and has paid tax @ 4.12% but after claiming the deduction of the same from the entire contract value. It is his submission that the appellant had reduced the taxable value by applying the provisions of Section 67((2) of the Finance Act, 1994 which permits the assessee to deduct the addition of the tax payable from the gross amount charged. It is also his submission that the appellant had discharged the service tax liability and interest thereof.
5. Learned D.R reiterated the findings of the lower authorities.
6. On consideration of the submissions made by both the sides, we find that the appellant has no case on merits for more than one reason.
6.1 Firstly, appellant had opted for discharge of service tax liability on the services rendered by them under the category of works contract by opting to pay the service tax under Composition Scheme. The provisions of Rule 3 (1) of the said Composition Scheme would be applicable in this kind of option to discharge the said service tax liability on works contract which we read -
3. (1) Notwithstanding anything contained in section 67 of the Act and rule 2A of the service Tax (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 service 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 property in goods involved; and
(ii) the cost of machinery; and tools' used in the execution of the said works contract except for the. charges for. obtaining them on hire:
PROVIDED that nothing contained in this Explanation shall apply to a works contract, where the execution under the said contract has commenced or where any payment, except by way of credit or debit to any account, has been made in relation to the said contract on or before the 7th day of July, 2009. It can be noticed from the above reproduced Rule 3(1) of the Composition Scheme that it is starts with an non-obstante clause which indicates that the provision of Section 67 may not be applicable in this case. It is very clear that the said scheme is an optional one and once an assessee opts to discharge the service tax liability under the Composition Scheme, he has to follow the provisions in the said Composition Scheme which will not be bound by the provisions to Section 67 of the Finance Act, 1994.
6.2 Secondly, the Composition Scheme being optional, having opted for it, appellant has no locus standi to revert back to workout the gross value charged for the services rendered. Factually also we find that the appellant had charged an amount to the service recipient as per the contract entered by them, which would be that the service tax liability under works contract services needs to be discharged on the gross amount charged i.e. entire gross amount charged for the works contract and there cannot be any deduction that can be claimed.
6.3 In view of the foregoing we are of the view that on merits appellant has no case and the differential tax liability as worked out by the adjudicating authority along with interest is correct and needs to be upheld and we do not find any reason for interference in the impugned order.
6.4 As regards the penalties imposed, we find that the appellant could have entertained a bonafide belief that the gross amount charged by him should be less amount of the tax payable under Composition Scheme. Since the issue involved in this case is of interpretation nature, we find that the penalties imposed on the appellant are unwarranted, more so, the appellant having discharged the service tax liability and the interest thereof during the proceedings, invoking the provisions to Section 80 of the Finance Act, 1994, we set aside the penalties imposed by the adjudicating authority and upheld by the first appellate authority.
7. Appeals is disposed of as indicated herein above.
(Dictated in Court) (C.J. Mathew) Member (Technical) (M.V. Ravindran) Member (Judicial) nsk ??
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1 6Appeal No. ST/611/11 .