TMI Blog2014 (6) TMI 831X X X X Extracts X X X X X X X X Extracts X X X X ..... n favor of assessee. The classification of services rendered prior to 01.06.2007 cannot affect the assessee’s entitlement to the Composition Scheme in respect of services rendered after 01.06.2007. However, in respect of advance received prior to 01.06.2007 which tantamounts to provisions of service prior to 01.06.2007, the benefit of composition rate could not have been claimed, on the said advance and in view of our findings recorded herein above, Service Tax on the same was payable under the head of Commercial or Industrial Construction Services, as has been held by the respondent. As such, the appellants contention that they were entitled to pay tax at the composition rate on advances received prior to 01.06.2007 cannot be accepted. Extended period of limitation - held that:- The alternative question whether the appellant would have been eligible for abatement computing the tax liability only advance payments is not being analyzed by us as we find that the entire demand on this count is hopelessly barred by limitation as the factum of the advance having been received prior to 01.06.2007 and in respect of the same tax having been discharged under the composition schem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er should get the benefit of Composition Scheme. Learned advocate argued that findings of the Adjudicating authority are contrary to the well settled principles of law that fiscal statues have tot be read according to the plain language contained in the provisions and not by referring to the intention of the legislature. That neither Rule 3(3) of the Composition Scheme nor CBEC Circular dated 24.08.2010 contain a provision that word payment used therein should be read as payable . That the Rule of liberal interpretation of fiscal statutes is required to be applied in this case in view of the recent Larger Bench judgment in the case of Bhayana Bujilders Private Limited [2013-TIOL-1331-CESTAT-LB]. That Apex court in the case of Nagarjuna Construction Company Limited vs. GOI [2012 (28) STR 561 (SC)], while dealing with the same Circular and the provisions, has held that those who paid service tax on the services prior to 01.6.2007 and those who paid service tax under Rule 3 of the 2007 Rules belong to different classes and there is no discrimination on the basis of the legal provisions and impugned CBEC Circular. 3.1 It was also the case of the Learned Advocate that alternative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tract (Composition Scheme for Payment of Service Tax) Rules, 2007 (effective from 01.6.2007) when the contracts for rendering services was entered before 01.6.2007 and part of the services were also rendered before 01.6.2007. The Advance payment for the service to be provided was received before 01.6.2007 and duly reflected in the returns filed with the Revenue but no service tax was paid before 01.6.2007. Appellant has argued that as per Rule 3(3) of the above Composition Scheme Rules, 2007, read with CBEC Circular dated 24.08.2010, Composition Scheme was correctly availed by the appellant. Appellant also relied upon the Apex Court s judgment in the case of Nagarjuna Construction Company Limited vs. GOI (supra) where the appellant paid the service tax on services under Section 65 (105) (zzd), 65 (105) (zzq) and 65 (105) (zzzh) prior to 01.6.2007. 5.1 Relevant provisions of Rule 3(3) of the Works Contract Rules, 2007 are reproduced below:- Option to avail Composition Scheme; 3 (1) (2) .. (2A) (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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted 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 1st June, 2007 and those who opted for payment of tax under the provisions of Rule 3 of the 2007 Rules and paid tax before exercising the option belong to different classes and, therefore, it cannot be said that the Impugned Circular or the provisions of Rule 3(3) of the 2007 Rules are discriminatory. 30. The appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 01.06.2007, if tax at the full standard rate (and not the composition rate) had become payable on a part of the contract value prior to 01.06.2007. The contention of the Revenue, with reference to this Board Circular dated 04.01.2008 is that a single contract cannot be vivisected and classified into two, for the purposes of Composition Rules 2007 and as in the present case an advance had been received prior to 01.06.2007 and liability to pay Service Tax thereon had arisen at the full standard rate on this part of the contract value, albeit under a different classification, i.e. Commercial Industrial Construction Services consequently, the remainder of the contract value could not be granted the benefit of Composition Scheme in view of the bar contained in Rule 3(3) of the Composition Rules 2007. The contention, in our view, is based on mis-reading of the circular dated 04.01.2008. 8.2 The CBEC Circular dt.04.01.2008 only prohibits vivisection of a single composite service into two taxable categories merely by virtue of the fact that a part of the consideration was received after 01.06.2007. Significantly, this circular does not prohibit vivisection of a composite contract und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntract Service and therefore in respect of the service covered by such a task, there can never be an option available to an assessee to pay tax at the Composition rate and consequently the question of such an assessee exercising such an option cannot arise. Since the Composition Rules 2007 came into effect from 01.06.2007 and provided for a specific definition of Works Contract Service as being provided in relation to the execution of a Works contract referred to in Section 65(105)(zzzza), the option contemplated in Rule 3(1) can only be an option in respect of such Works Contract Service i.e. services provided after 01.06.2007, which in the illustration given above, is a reference to the balance four tasks/services performed after 01.06.2007. The expression Works Contract Services and Works Contract appearing in Rule 3 of the Composition Rules 2007 should be understood analogously to refer to such contracted services which are after 01.06.2007. Thus, as long as the assessee is clear in choosing the Composition option in respect of services provided after 01.06.2007 and does not vacillate on his choice, he is entitled to avail of the Composition rate under Rule 3(1) for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the appellant had opted to pay tax at the Composition rate and not at the standard rate and was thus eligible for the composition benefit in respect of services provided after 01.06.2007. However, in respect of advance received prior to 01.06.2007 which tantamounts to provisions of service prior to 01.06.2007, the benefit of composition rate could not have been claimed, on the said advance and in view of our findings recorded herein above, Service Tax on the same was payable under the head of Commercial or Industrial Construction Services, as has been held by the respondent. As such, the appellants contention that they were entitled to pay tax at the composition rate on advances received prior to 01.06.2007 cannot be accepted. The alternative question whether the appellant would have been eligible for abatement computing the tax liability only advance payments is not being analyzed by us as we find that the entire demand on this count is hopelessly barred by limitation as the factum of the advance having been received prior to 01.06.2007 and in respect of the same tax having been discharged under the composition scheme was specifically stated in the Service Tax return. It is set ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
