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2018 (9) TMI 1450 - AT - Service TaxValuation- Composite Works Contract - Benefit of Composition Scheme - It is alleged that by dividing the work contract into two parts and paying service tax applicable for one work contract (composition scheme for payment of service tax) an amount of ₹ 21,01,50,386/- has been evaded by the respondent - case of Revenue is that composite scheme was only available when the value of services alongwith the value of supply of goods is included in the service taxable value of the service. - Erection and commissioning on turnkey basis Held that:- The respondent/assessee were awarded contract on EPC basis by various electricity companies such as North Delhi Power Limited, Dakshin Haryana Bijli Vitran Limited etc. and it can be seen from the contract that all the contracts are composite contract for the supply of goods as well as for erection and commissioning on turnkey basis. It has also been the matter of fact that the respondent/assessee has opted to pay the service tax under Rule 3 (i) of Work Contract (Composition Scheme for Payment of Service Tax) Rules, 2007. The composition scheme for payment of the service tax was primarily meant to facilitate the service tax provider that they need not to bother with regard to bifurcation of supply and service element from the composite work contracts rather they were allowed to discharge their service tax liability on the concessional rate - From the perusal of the Rule 3 (i), it is clear that for determination of the value under the composition scheme, the value of all goods used in or in relation to execution of the work contract need to be included in the serviceable value even when the goods might have been supplied under any other contract for execution of the composite work contract. It is a matter of record in this case that all the contracts are composite contracts for both supply of goods and services as both the elements are absolute pre-requisite for completion of any turnkey project. It is also of the matter of fact that the respondent/assessee has opted for the benefit of composite work contract service and has availed the benefit of Rule 3 (i) of Work Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 - thus, the value of both supply and service need to be added for payment of service tax under composition scheme. Time limitation - Held that:- The appellant is fully aware of the legal implications of service tax liability on composite works contract. Their act of first paying composition rate on what is claimed to be a service contract and later switching over to full rate of payment without composition clearly reveals the knowledge and deliberate intend of the appellant - extended period rightly invoked. Matter remanded to the original Adjudicating Authority for purpose to verify the claim of the respondent/assessee in his arguments submitted before this Tribunal that on certain contracts they have paid full rate of service tax rather than concessional rate of service tax under composition scheme - appeal allowed by way of remand.
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