TMI Blog2014 (3) TMI 454X X X X Extracts X X X X X X X X Extracts X X X X ..... lue charged by the appellant there is no necessity to take recourse for determining the value under Service Tax (determination of value) Rules 2006. Appellant is discharging full Service Tax under the category of Works Contract Service using Inputs and Input Service are used for rendering of ‘output services’; on reading of provisions of Rule 2(l) of the cenvat credit rules 2004 it would indicate that assessee is eligible avail to cenvat credit of Inputs and input services which are used to provide ‘output service’ which would include ‘setting up’ of a factory premises. In the case in hand, it is undisputed that the appellant had provided output services which covered by works contract for setting up of plant, it has to be held that cenvat credit availed by the appellant is in consonance with the provisions of the Cenvat Credit Rules 2004. We also hold that the discharge of Service Tax liability at full rate by the appellant by applying provisions of section 67 of the Finance Act 1994 cannot be called in question by the Revenue - Decided in favour of assessee. - Appeal No. : E/464/2011-DB - ORDER No. A/10349/2014 - Dated:- 10-3-2014 - Mr. M.V. Ravindran and Mr. H.K. Thakur, J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... executed by them under taxable category works contract services. It is his submission that there is no dispute as to the fact that contract which was entered by them was the works contract which require them to construct the entire factory building for one of their client. It is also his submission that gross consideration which is indicated in the contract included the value of cement, steel etc., procured by the appellant on payment of duty as well as various input services availed for execution of said contract. It is his submission that the appellant availed cenvat credit of the excise duty paid on inputs and input services in terms of the provisions of Cenvat Credit Rules 2004. It is his submission that appellant had many options of discharging the service tax liability under the provisions of Sec. 67 of Finance Act 1994 and decided to discharge the service tax on the entire taxable value of the contract executed by them. After making such submissions, he would take us through provisions of section 67 of the Finance Act 1994. It is his submissions that the amount of contract entered by the appellant was clearly known and determined hence the same would be the correct value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al position as to non-availment of benefit of Notification No. 12/2003/ST is recognized by the CBEC letter No. 80/10/2004-ST dated 17.9.2004 and refers to Para 13.5. It is submission that the said Board Circular is binding on the department. It is his further submission that the reliance placed by the adjudicating authority on explanation at the end of Rule 3 Cenvat Credit Rule 2004 is entirely misplaced as this explanation will come into play only when there exists any rule or notification providing for grant of whole or partial exemption on condition of a non-availability of cenvat credit on inputs or capital good or input services. It is his submission that rule 2A of Service Tax Valuation Rules, or Rule 3 of the composition rules does not grant any exemption whether wholly or partly from payment of service tax but only provides for the manner of determination of taxable value in respect of works contract services. He would also read sub Rule 2(A) inserted in Rule 3 of the composition rule which is in effect from 1.3.2011 only. It is his further submission that denial of cenvat credit on inputs, input services is availed and is as per law and there cannot be any allegation of ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charged Service Tax by adopting the valuation of services as per the provisions of Rule 2A of Service Tax (determination of value) Rules 2006 and or Works Contract (Composition Scheme for payment of service tax) Rules 2007. 10. In our considered view, the entire issue is misconceived by the Adjudicating Authority for more than one reason. 11. Firstly, the appellant entered into work contract service and service tax liability on such works contract needs to be discharged based on reading Section 67 of Finance Act 1994. In order to appreciate the said provisions we reproduce section 67 which reads as under : 67. Valuation of taxable services for charging service tax. - (1) Subject to the provisions of this Chapter, where service tax is chargeable on any taxable service with reference to its value, then such value shall, - (i) in a case where the provision of service is for a consideration in money, be the gross amount charged by the service provider for such service provided or to be provided by him; (ii) in a case where the provision of service is for a consideration not wholly or partly consisting of money, be such amount in money as, with the addition of service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions of 67(4) necessary implication is that the value for discharge of service tax liability needs to be determined by referring to service tax valuation rules. In the case in hand since there is no dispute as to the gross value charged by the appellant there is no necessity to take recourse for determining the value under Service Tax (determination of value) Rules 2006. 13. Secondly, we find strong force in the contentions as raised by the Counsel as to applicability of the provisions of Rule 2A of the service tax determination of value rules 2006. We find that the said rule starts with the expression subject to the provisions of section 67 means that value of the services, involved in execution of works contract if cannot be determined under said Section, then only the said provisions of Rule 2A would apply and shall be determined in the manner as is indicated therein. In our considered view, this rule will not be applicable to the case in hand. 14. Thirdly, we find that the adjudicating authority and assertion of departmental representative, that the appellant being a person and having provided works contract services should have discharged the service tax liability un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (3) The provider of taxable service who opts to pay service tax under these rules shall exercise such option in respect of a works contract prior to payment of service tax in respect of the said works contract and the option so exercised shall be applicable for the entire works contract and shall not be withdrawn until the completion of the said works contract. 16. It is pertinent to note that the said rule 3(1) of Works Contract (composition scheme for payment of service tax) Rules 2007 if read carefully would indicate that the service provider in relation to works contract, service has an option to discharge service tax liability in respect of works contract services in the manner prescribed therein. If there is an option which needs to be exercised and if an assessee chooses not to exercise such an option of discharge of service tax liability under works contract (Composition Scheme for payment of Service Tax) Rule 2007, then only meaning that can be attributed will be that the service provider or an assessee has to discharge the Service Tax liability at the full rate. We are fortified in this view, by apex court in the case of Chandavarkar Sita Ratna Rao vs. Ashalata S Guram ..... X X X X Extracts X X X X X X X X Extracts X X X X
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