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2016 (10) TMI 620 - CESTAT NEW DELHI

2016 (10) TMI 620 - CESTAT NEW DELHI - TMI - Classification of service - commercial or industrial construction service or works contract service - works contract service wef 1/6/2007 - denial of the benefit of N/N. 12/2003-ST dated 20/6/2003 and benefits of Rule 2A of the Service Tax Determination of Valuation Rules 2006 - The appellant was paying service tax prior to the introduction of Works Contract Service [WCS] (w.e.f. 01/6/2007) under Commercial or Industrial Construction Service. After th .....

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) whether they will be entitled to exclude the value of goods supplied under Rule 2A of the Service Tax Determination of Valuation Rules - this issue stands decided in the case of Ahluwalia Contracts (I) Ltd. vs CCE, Noida [2015 (7) TMI 855 - CESTAT NEW DELHI] where it is held that the issue is not res integra and this case relied upon. They will be entitled to re-classify their services under Works Contract Scheme 01/6/07. They will also be entitled to the benefit of Rule 2A of the Service Tax .....

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al) Shri Narendra Singhvi, Advocate - for the Appellant. Shri Amresh Jain, Authorized Representative (DR) for the Respondent. ORDER Per: V. Padmanabhan : The appellant is engaged in the activity of construction services. Upto 01/6/07 they were paying service tax after registering themselves under Commercial or Industrial Construction Services (CIC) taxable under Section 65 (105) (zzq) of the Finance Act, 1994 and defined under Section 65 (25) (b) of the Act. After the introduction of the Works C .....

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prior to 01/6/07 under CIS and the same works contracts were continued beyond that date. Further, the availment of the composition scheme was also held to be improper in the light of the Rule 3 (3) of the Works Contract (composition scheme for payment of service tax) Rules, 2007 which provides that :- 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 .....

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June 2007 to March 2008 under the service category of commercial or industrial construction. He also denied the benefit of Notification 12/2003-ST dated 20/6/2003 and benefits of Rule 2A of the Service Tax Determination of Valuation Rules 2006 by which the appellant had sought exclusion of the value of goods supplied under the Works Contract Scheme. 3. The appellant has challenged the impugned order mainly on the following grounds. Even though service tax was being paid by them under commercial .....

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er works contract scheme after its introduction from 01/6/07. The appellant has further submitted that w.e.f. 01/6/07 they will not only be entitled to the change of their classification to WCS, but will also be entitled to the benefit of Rule 2A of the Service Tax Determination of Valuation Rules, 2006. This view finds support in the decision of Tribunal in the case of Ahluwalia Contracts (I) Ltd, vs, CCE, Noida reported in 2015 (38) 33 (Tri. Del.). This decision also stands affirmed by the Hon .....

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s as well as rendering of service. The appellant was paying service tax prior to the introduction of Works Contract Service [WCS] (w.e.f. 01/6/2007) under Commercial or Industrial Construction Service. After the introduction of the works contract service they have sought re-classification of their service under the newly introduced WCS. Such switch over was denied by the Revenue in the proceedings leading to the impugned order. It has been settled by the Hon'ble Supreme Court in the Larsen & .....

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The facts of those case are identical to the present. It is useful to reproduce the finding of the Tribunal in the Ahluwalia Contracts (I) Ltd. case :- "4. It is seen that the appellants started classifying the service rendered by them under works contract service with effect from 1-6-2007 and started availing of the Composition Scheme. The adjudicating authority denied such re-classification on the ground that services under those works contracts had commenced prior to 1-6-2007 under CICS/ .....

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g contracts, the assessee cannot switch over to Composition Scheme. However, there can be no doubt that the classification of service is to be determined in terms of the nature of service rendered vis-a-vis the definition of various services as applicable on the date of rendition of service. The Board's circular dated 4-1-2008 is in disharmony with law to the extent it holds that with effect from 1-6-2007 the classification cannot be changed for ongoing projects even if the service rendered .....

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