Custom, Excise & Service Tax Tribunal
M/S Ahluwalia Contracts (I) Ltd vs Cce, Noida on 3 December, 2014
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
West Block No. 2, R.K. Puram, New Delhi 110 066.
Date of Hearing : 3.12.2014
No. ST/Stay/51280/2014 and ST/51104/2014-CU(DB) &
[Arising out of Order-in-Appeal No. 146/CE/Appl/Noida/2013 dated 30.7.2013 passed by the Commissioner (Appeals), Central Excise, Noida]
For Approval & Signature :
Honble Mr. Justice G. Raghuram, President
Honble Mr. R.K. Singh, Member (Technical)
1.
Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2.
Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3.
Whether their Lordships wish to see the fair copy of the order?
4.
Whether order is to be circulated to the Department Authorities?
M/s Ahluwalia Contracts (I) Ltd. Appellant
Vs.
CCE, Noida Respondent
Appearance:
Shri S.K. Sarwal, Advocate - for the Appellant
Shri Govind Dixit, A.R. - for the Respondent
Coram : Honble Mr. Justice G. Raghuram, President
Honble Mr. R.K. Singh, Member (Technical)
F. Order No.54786/2014
Per R.K. Singh :
Stay application along with appeal has been filed against Order-in-Appeal No.146/CE/Appl/Noida/2013 dated 30.7.2013 in terms of which their appeal against order-in-original dated 19.2.2013 was rejected for failure to pre-deposit 50% of the service tax amount of Rs.23,87,585/- within 15 days as per ad interim order of the Commissioner (Appeals) dated 10.6.2013. The appellants have contended that they have been disallowed the Composition Scheme for works contract service (Notification No. 32/2007-ST) in respect of the composite contracts executed with effect from 1.6.2007 on the ground that these were ongoing contracts and at the same time the benefit of 67% abatement under Notification No. 1/2006-ST has also been denied to them on the ground that they had taken Cenvat credit of input services. They have contended that they cannot be deprived of the Composition Scheme and/or the benefit of Notification No. 1/2006-ST.
2. The ld. AR supported the impugned order, stating that classification of service cannot be changed in respect of ongoing contracts.
3. Heard both sides. In view of the nature of the issue involved, with the consent of both sides, we take up the appeal itself waiving the requirement of pre-deposit.
4. It is seen that the appellants started classifying the service rendered by them under works contract service with effect from 1.6.2007 and started availing of the Composition Scheme. The adjudicating authority denied such re-classification on the ground that services under those works contracts had commenced prior to 1.6.2004 under CICS/CCS and as per Boards Circular No. 98/1/2008-ST dated 4.1.2008 Composition Scheme in respect of such contracts is not permissible. The issue whether for ongoing contracts which commenced prior to 1.6.2007 and service tax was paid under respective services, Composition Scheme could be availed of with effect from 1.6.2007 classifying the service under works contract service has been decided by Andhara Pradesh High Court in the case of Nararujuna Construction Ltd. holding that for such ongoing contracts, the assessee cannot switch over to Composition Scheme. However, there can be no doubt that the classification of service is to be determined in terms of the nature of service rendered vis-a-vis the definition of various services as applicable on the date of rendition of service. The Boards circular dated 4.1.2008 is in disharmony with law to the extent it holds that with effect from 1.6.2007 the classification cannot be changed for ongoing projects even if the service rendered is more specifically covered there under. Thus even if the classification of service prior to 1.6.2007 in respect of ongoing contracts was under CICS/CCS, the same would be classifiable as works contract service (WCS) with effect from 1.6.2007 if the service rendered was more specifically covered there under and if the classification is held to be under WCS the benefit of Notification No. 1/2006-ST would not be applicable with effect from 1.6.2007 as the said notification is not applicable to works contract service. However, the benefit of Rule 2A of the Service Tax (Determination of Value) Rules, 2006 or any other applicable notification can be claimed by the appellants subject to producing the required evidence.
As regards denial of the benefit of abatement under Notification No. 1/2006-ST on the ground that the appellants had taken Cenvat credit in respect of input services, it is to be pointed out that the said notification does not debar availment of Cenvat credit on input services.
5. In the light of the foregoing we allow the appeal by way of remand of the case to the primary adjudicating authority for de novo adjudication inter alia with the following directions :
(1) With effect from 1.6.2007 the classification of the service rendered will be determined in accordance with the definitions of various services and if the classification is determined to be under works contract service, the benefit of composition Scheme will not be available in respect of such contracts which commenced prior to 1.6.2007;
(2) If the appellants claim the benefit of Rule 2A of the Service Tax (Determination of Value Rules), 2006 or any other applicable exemption notification, the same should be considered on merit.
(3) The benefit of Notification No. 1/2006-ST if otherwise available should not be denied on the ground that Cenvat credit of input services has been taken.
The appellants shall be given an opportunity of being heard before de novo adjudication.
(Justice G. Raghuram) President (R.K. Singh) Member (Technical) RM 1