TMI Blog2012 (11) TMI 404X X X X Extracts X X X X X X X X Extracts X X X X ..... had exercised a particular option with regard to the mode of payment of tax after 1st July, 2007 with regard to reclassified works contract. Thus in agreement with the submissions made by the respondents that not availing of CENVAT credit is absolutely irrelevant in the instant case. We do not accept the submission of the learned counsel appearing for the appellant that the Impugned Circular is discriminatory in nature. The Impugned Circular is not contrary to the Act or the statutory rules made thereunder and the Impugned Circular only provides guidelines as to how the provisions of Rule 3 (3) of the 2007 Rules are to be interpreted. Even if the Impugned Circular is set aside, the provisions of Rule 3 (3) of the 2007 Rules would remain and that would not benefit the appellant. Thus the High Court did not commit any error while upholding the Impugned Circular and, therefore, appeal dismissed - against assessee. - CIVIL APPEAL NO. 7933 OF 2012 - - - Dated:- 9-11-2012 - D.K. JAIN AND ANIL R. DAVE, JJ. JUDGMENT ANIL R. DAVE, J. 1. Leave granted. 2. This appeal arises from the judgment and final order dated 7th June, 2010, passed by the High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or a civil structure or a part thereof; or (b) construction of pipeline or conduit; or (c) completion and finishing services such as glazing, plastering, painting, floor or wall tiling, wall covering and wall papering, wood and metal joinery and carpentry, fencing and railing, construction of swimming pools, acoustic applications or fittings and other similar services, in relation to building or civil structure; or (d) repair, alteration, renovation or restoration of, or similar services in relation to, building or civil structure, pipeline or conduit, which is- (i) used, or to be used, primarily for; or (ii) occupied, or to be occupied, primarily with; or (iii) engaged, or to be engaged, primarily in, commerce or industry, or work intended for commerce or industry, but does not include such services provided in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams; 6. The taxable services covered by Clause (zzzh) (construction of complex) are defined in sub-section 30 (a) of Section 65 of the Act, which reads as under: 30(a): construction of complex means (a) construction of a new residential c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a new residential complex or a part thereof; or (d) completion and finishing services, repair, alteration, renovation or restoration of, or similar services, in relation to (b) and (c); or (e) turnkey projects including engineering, procurement and construction or commissioning (EPC) projects; 9. Section 65A of the Act provides that the classification of taxable services shall be determined according to the terms of the sub-clauses of Clause (105) of Section 65 of the Act and when, for any reason, a taxable service is, prima facie, classifiable under two or more sub-clauses of Clause (105) of Section 65 of the Act, the classification shall be effected as follows: (a) the sub-clause which provides the most specific description shall be preferred to sub-clauses providing a more general description; (b) composite services consisting of a combination of different services which cannot be classified in the manner specified in clause (a), shall be classified as if they consisted of a service which gives them their essential character, in so far as this criterion is applicable; (c) When a service cannot be classified in the manner specified in clause (a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvice and classifying the same under two different taxable services depending upon the time of receipt of the consideration is not legally sustainable. 13. In view of the above, the appellant, who had paid service tax prior to 01.06.07 for the taxable services, namely, erection, commissioning or installation service, commercial or industrial construction service or construction of complex service, was not entitled to change the classification of the single composite service for the purpose of payment of service tax on or after 01.06.07 and hence, was not entitled to avail of the Composition Scheme. 14. In view of the fact that the appellant had classified the ongoing contracts entered into prior to 1.6.2007 under the category of works contract service and had started discharging the service tax liability at the rates specified in the 2007 Rules, show cause notices were issued to the appellant for recovery of difference of service tax payable by it alongwith applicable interest and penalty. 15. Aggrieved by the same, the appellant filed a Writ Petition before the High Court challenging the vires of the Impugned Circular. The High Court, while dismissing the petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orities cannot take away the benefit given to the appellant under Rule 3 (3) of the 2007 Rules and therefore, the Impugned Circular is bad in law. 19. He thereafter submitted that Rule 3 (3) of the 2007 Rules cannot be interpreted in a way so as to deprive the persons who had already paid tax under the old provisions. He submitted that the appellant had already started making payment @ 2% of the gross amount charged for the works contract at the relevant time and, therefore, the appellant cannot be constrained to change the method of payment of tax after 1st June, 2007. 20. In order to substantiate his submission that a circular cannot override a statutory provision, he relied on the judgments delivered in the cases of Tata Teleservices Ltd. v. Commissioner of Customs 2006 (1) SCC 746 and Commissioner of Central Excise, Bolpur v. Ratan Melting Wire Industries (2008) 231 ELT 22. He, therefore, submitted that the Impugned Circular is bad in law and the High Court committed an error by not quashing the same and, therefore, the appeal deserves to be allowed and the Impugned Circular should be quashed. 21. On the other hand, the learned Additional Solicitor General appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clear that the assessee who wants to avail of the benefit under Rule 3 of the 2007 Rules must opt to pay service tax in respect of a works contract before payment of service tax in respect of the works contract and the option so exercised is to be applied to the entire works contract and the assessee is not permitted to change the option till the said works contract is completed. 28. In the instant case it is an admitted fact that the appellant- assessee had already paid service tax on the basis of classification of works contract which was in force prior to 1st July, 2007. In the circumstances, it cannot be said that the appellant had exercised a particular option with regard to the mode of payment of tax after 1st July, 2007 with regard to reclassified works contract. We are in agreement with the submissions made by the learned counsel appearing for the respondents that not availing of CENVAT credit is absolutely irrelevant in the instant case. 29. We do not accept the submission of the learned counsel appearing for the appellant that the Impugned Circular is discriminatory in nature. Those who had paid tax as per the provisions and classification existing prior to Ist ..... X X X X Extracts X X X X X X X X Extracts X X X X
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