TMI Blog2015 (1) TMI 455X X X X Extracts X X X X X X X X Extracts X X X X ..... ion so as to have deterrent effect on them. I thus, hold that the demand is sustainable and services are classifiable under ‘Construction of Commercial/Industrial Complex Service’ for the period prior to 1-6-2007 and under ’Works Contract Service’ w.e.f. 1-6-2007. Thus, the demand has correctly been raised and confirmed vide the impugned order which needs no interference on this count. Thus, the first issue stands decided against the appellants. For the ongoing contracts which were classified where service tax has been paid in the respective specified services before being classifiable under the ‘works contract service’, the benefit of composition scheme would not be applicable. Conversely, if no service tax has earlier been paid, the benefit of the scheme would be admissible to assessee. In the instant case the appellants were not registered with the department and they had have not paid any service tax under the category of ‘Construction of Commercial/Industrial Complex Services’ till the filing of appeal. Hence, in view of my deliberations supra, all the pre-requisites of availing the facility under Rule 3(1) of the Composition Scheme, are met with. Benefit under the compo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2-4-2013 (for brevity the impugned order ) passed by the Assistant Commissioner, Central Excise Division, Sangrur (for brevity the adjudicating authority ). Along with the appeal, the appellants have also filed application for stay of the recovery of govt. dues. Accordingly, I take up both, the appeal and the stay application together, for decision in the matter. 2. Briefly stated, during the course of enquiry, the department was informed by the Improvement Trust, Ropar that the appellants had provided services falling under the category of Construction of Commercial/Industrial Complex Service to them. For the services so provided the appellants had been paid ₹ 1,86,375/- on 1-3-2007, ₹ 92,39,410/- in 2007-08 and ₹ 14,86,188/- in 2008-09. Accordingly, the appellants were requested to get themselves registered and to intimate the quantum of taxable value of the services provided by them and also provide copies of the Balance Sheets for the above mentioned period to confirm the value of the taxable services provided which they failed to provide. 2.1 The appellants were issued show cause notice proposing recovery of service tax of ₹ 4,37,476/- under S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 23-2-2007 for construction of SCO s. For the said services they had received payments during the period from 2006-07 to 2008-09. The demand had been raised on the appellants under the category of Construction of Commercial/Industrial Complex service . The contention of the appellants is that the contract was a Works contract and accordingly, the services, in actual, were classifiable under Work Contract Services which were brought under the service tax net w.e.f. 1-6-2007 only, and since the services had been wrongly classified, the demand was not sustainable. Further, it is contested that had the services been classified under Works Contract Service the demand would have been for a lesser amount. 6. I thus, find that the issue needs decision on the following two issues : i. whether the services provided by the appellants during the period of demand fell under the category of Construction of Commercial/Industrial Complex service when the contracts allotted were Works contracts ; ii. whether they were entitled to the benefit of the payment of service tax under the composition scheme at the rates applicable during the relevant period. 7. On the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed above, Section 65(105) (zzzza) read with Rule 2A of Service Tax (Determination of Value) Rules, 2006 and Work Contract (Composite Schemes for Payment of Service Tax) Rules, 2007 only provide a new machinery provision for assessment of service tax on Erection, installation or Commissioning Contracts , Commercial or industrial construction contracts , Residential Construction Service Contracts and EPC Contracts involving transfer of property in goods on which Sales Tax/VAT is chargeable. But it does not mean that these contracts were not liable to Service Tax prior to 1-6-2007 as, as discussed above, erection, installation or commissioning services , commercial or industrial construction service , Residential constructions services were taxable even prior to 1-6-2007, even if the same involved use/supply of goods on which Sales tax/VAT was payable. Similarly in respect of EPC contracts which are divisible contracts for design engineering, procurement of goods, erection, installations commissioning, service tax was chargeable even prior to 1-6-2007 on these taxable service component. The taxable services covered by Section 65(105)(zzza) and the services covered by Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs and civil structure, erection, commissioning and installation, construction of residential complexes, maintenance or repair services, site preparation and clearance and transport of goods by road. 5. The grievance of the petitioner is that in relation to the on going works being executed and in respect of which it had paid service tax prior to 1-6-2007, the petitioner is denied benefits under the composition scheme, under the Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 ( 2007 Rules ). The challenge is on the ground that the impugned circular is irrational, discriminatory, ultra vires Sec. 65(105)(zzzza) of the Finance Act, 1994 ( the Act ) and inconsistent with the objects of Rule 3(3) of the 2007 Rules. 6. On a true and fair construction of the clarification contained in the impugned circular (by way of amendment to the earlier circular dated 23-8-2007), a service provider who paid service tax prior to 1-6-2007 for the taxable services such as erection, commission or installing services, commercial or industrial construction services or construction of complex services, as the case may be, is not entitled to avail the composition scheme unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... them. I thus, hold that the demand is sustainable and services are classifiable under Construction of Commercial/Industrial Complex Service for the period prior to 1-6-2007 and under Works Contract Service w.e.f. 1-6-2007. Thus, the demand has correctly been raised and confirmed vide the impugned order which needs no interference on this count. Thus, the first issue stands decided against the appellants. 9. Coming to the second issue, I find that the appellants have contested that had correct classification been made by the department the demand would have been on the lower side. In this regard I find that as I have held in the preceding para that the services provided by the appellants w.e.f. 1-6-2007 would be aptly classifiable under Works Contract Service , therefore, in case the appellants fulfil the conditions laid down in the Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 (for brevity the Composition Scheme ) their liability for the period from 1-6-2007 onwards, ought to be assessed under the Rules thereunder. 9.1 I observe that admissibility to pay service tax under Rule 3(1) of the Composition Scheme is subject to the fulfillment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pective taxable service prior to 1-6-2007. This is because works contract describes the nature of the activity more specifically and, therefore, as per the provisions of section 65A of the Finance Act, 1994, it would be the appropriate classification for the part of the service provided after that date. 3. As regards applicability of composition scheme, the material fact would be whether such a contract satisfies Rule 3(3) of the Works Contract (Composition Scheme for payment of Service Tax) Rules, 2007. This provision casts an obligation for exercising an option to choose the scheme prior to payment of service tax in respect of a particular works contract. Once such an option is made, it is applicable for the entire contract and cannot be altered. Therefore, in case a contract where the provision of service commenced prior to 1-6-2007 and any payment of service tax was made under the respective taxable service before 1-6-2007, the said condition under rule 3(3) was not satisfied and thus no portion of that contract would be eligible for composition scheme. On the other hand, even if the provision of service commenced before 1-6-2007 but no payment of service tax was made till ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 1 to sub-section (2B) of Section 11A ibid differentiating civil and criminal liabilities - Language in impugned Section clear and not provides discretion on quantum - Interest to be charged as notified by Government - Use of words shall and be liable in Section 11A(1) ibid indicating absence of option and interest chargeable in all cases of non-payment or short payment - Interest charged in original order upheld - Section 11AB ibid. - Interest is a civil liability of assessee who has retained amount of public exchequer with himself and which ought to have gone in the pockets of Central Government much earlier. Interest on duty evaded is payable and the same is compulsory even though evasion of duty is not mala fide or intentional. [paras 1, 7, 10, 11].... .7. Considering the scheme together, it is evident that interest chargeable u/s. 11AB is a sort of civil liability of the assessee, who has failed to pay the duty or who has short paid the duty. This is irrespective of the fact whether such non-payment/short payment is innocent or mala fide. .. 11. The appellants have also contested that the demand was time barred, though no reason whatsoever has been attributed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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