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2024 (2) TMI 1254 - AT - Service TaxEligibility for works contract composition scheme - ongoing works contract as on 01.06.2007 - HELD THAT:- The contracts executed by the appellants is composite in nature as the Appellant is engaged in both supply of goods as well as service and have been rightly classified under the tax entry works contract service. It can be understood from the interpretation by the Hon’ble Supreme Court in the case of Larsen & Toubro Ltd [2015 (8) TMI 749 - SUPREME COURT] that there is no liability to service tax in respect of indivisible composite works contract prior to 01.06.2007. In the present case the Appellant is not contesting their service tax liability under works contract service after 01.06.2007 but their entitlement to pay the said tax in terms of composition scheme of 2007. The original authority held that the appellants switched over from construction service to works contract service only to avail the benefit of the scheme and thus are in contravention of the provisions of the said scheme. It has been observed that the denial of the composition scheme by the Adjudicating Authority is only based on the change of head from Commercial or Industrial construction service to works contract service that because of which the Appellant cannot opt for payment of service tax under works contract service under the composition scheme. The activities carried out by the appellants become liable for taxation only with effect from 01.06.2007 as such activities prior to 01.06.2007 were not categorised as taxable services therefore it is inconsequential to the issue. Post introduction of the new tax entry the appellant discharged service tax in tune to the provisions applicable to them therefore their entitlement cannot be denied. The absolute identical issue that whether in case of ongoing project running from the period prior to 01.06.2007 and after 01.06.2007 whether the assessee is eligible to avail the composition scheme under ‘works contract service’ form 01.06.2007 has been elaborately considered by relying upon Hon’ble Gujarat High Court, in the case of JMC Project India Ltd [2022 (6) TMI 303 - CESTAT AHMEDABAD] where it was held that prior to 01.06.2007, the activity int nature of work contract were not taxable. Thus, it is no longer res-integra that the assessee can opt for composition scheme under ‘works contract service’ even in respect of ongoing projects with effect from 01.06.2007. The Appellant is eligible for Composition Scheme under Works Contract. The impugned order is set aside - appeal allowed.
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