2024-VIL-271-CESTAT-AHM-ST
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SERVICE TAX CESTAT Cases

Service Tax – Section 65(105)(zzzza) of Finance Act 1994 – Works Contract (Composition Scheme for payment of Service Tax) Rules, 2007 – Works contract service – Eligibility for composition scheme – Appellant provided services in nature of construction/erectioning of towers and pipelines – Since activity carried out by Appellant involved both supply of goods as well as provision of services, Appellant reclassified their activity from construction services to works contract service for ongoing projects and paid service tax at prescribed rate of 2% on total value of works contract – Department issued show cause notice to Appellant demanding differential service tax on ground that benefit of composition scheme under Works Contract Service is not admissible for on-going projects – Adjudicating authority confirmed demand proposed in show cause notice – Whether works contract composition scheme can be opted by Appellant in respect of ongoing works contract as on 1-6-2007 – HELD – New category of taxable services defined as Works Contract Service was introduced in service tax net under Section 65(105)(zzzza) of the Act with effect from 1-6-2007 – Subject to fulfilment of conditions in terms of Composition Scheme of 2007, Appellants are eligible to discharge service tax on works contract post 1-6-2007 – Appellant is not contesting their service tax liability under works contract service after 1-6-2007, but their entitlement to pay said tax in terms of composition scheme under the Rules – Contract executed by Appellants is composite in nature, as Appellant is engaged in both supply of goods as well as service and have been rightly classified under tax entry ‘works contract service’ – Issue has been squarely covered by Tribunal in cases of Kohli Construction Pvt. Ltd and Jija Builders – In said cases, Tribunal held that such option can be exercised in case of ongoing projects as well – In view of above judgments, it is no longer res-integra that assessee can opt for composition scheme under ‘works contract service’ even in respect of ongoing projects with effect from 1-6-2007 – Appellant is eligible for Composition Scheme under Works Contract Service – Impugned order passed by Adjudicating authority set aside – Appeal allowed
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