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TMI Blog2018 (9) TMI 1450X X X X Extracts X X X X X X X X Extracts X X X X ..... ct service. The above show cause notice has been issued as the department has entertained a view that composite work contract were divided by the respondent/assessee into two parts which was otherwise a composite work contract. It has also been alleged that by dividing the work contract into two parts and paying service tax applicable for one work contract (composition scheme for payment of service tax) an amount of Rs. 21,01,50,386/- has been evaded by the respondent. The other provisions with regard to Section 75, 76, 77 (d) and 78 of the Finance Act, 1994 has also invoked. The basic contention of the department has been that since the contracts given to the respondent/assessee by various electricity departments are primarily composite contracts and the service tax @ composite scheme (4.12%) was only available when the value of services alongwith the value of supply of goods is included in the service taxable value of the service. The matter was adjudicated by the Commissioner who vide his order dated 10/06/2015 has set aside the show cause notice and the allegations as raised in the show cause notice have not been upheld by the learned Commissioner. Feeling aggrieved by the abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvice value and above all, with an intent to evade payment of tax. 4. Further, the Adjudicating Authority failed to appreciate that equipments supplied under „supply of equipment contract‟ are essential part or construction and commissioning of the power projects. Works Contract service is defined under Section 65 (105) (zzzza) of the Act which has an explanation there under. As per clause (ii) sub-clause (e) of the said explanation turnkey projects including engineering, procurement and construction or commissioning (EPC) projects will be classified as Works Contract wherein the transfer of property in goods involved in the execution of such contract is leviable to tax as sale of goods. The noticee had well accepted the EPC projects as Works Contracts but had just contrived to split the execution of Works Contract into two parts and ignoring the fact that evidence was writ large against them in as much as the noticee itself was the service provider, they themselves had supplied/sold the material which was to be used by them in the execution of impugned Works Contracts. Therefore, the impugned Works Contracts are well within the framework of Composition Scheme and liab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll as for erection and commissioning on turnkey basis. It has also been the matter of fact that the respondent/assessee has opted to pay the service tax under Rule 3 (i) of Work Contract (Composition Scheme for Payment of Service Tax) Rules, 2007. We are of the opinion that the composition scheme for payment of the service tax was primarily meant to facilitate the service tax provider that they need not to bother with regard to bifurcation of supply and service element from the composite work contracts rather they were allowed to discharge their service tax liability on the concessional rate. The relevant Rule 3 (i) of the Composition Scheme (supra) is reproduced here below :- "3 (1) Notwithstanding anything contained in Section 67 of the Act and rule 2A of the Service (Determination of Value) Rules, 2006, the person liable to pay service tax in relation to works contract service shall have the option to discharge his serviced tax liability on the works contract service provided or to be provided, instead of paying service tax at the rate specified in Section 66 of the Act, by paying an amount equivalent to (four percent) of the gross amount charged for the works contract. Exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant and the recipient of service belong to O.P. Jindal Group of Companies as recorded in the impugned order. The Original Authority examining the overall scope of the arrangement recorded as below :- "48. In other words, there is a single Co-ordination Agreement dated 30/08/2007 between the assessee/noticee & M/s Raj West Power Ltd. in respect of the complete project viz., „Raw Water Piping & Pumping System‟ which includes supply of material & erection work. Further, there is a set of „Technical Specifications‟ pertaining to both the contracts which is referred as Section - III to the supply contract and the erection contract. The „Technical Specifications‟ document is common to both the contracts and it is in the form of a "Contract Document Between RWPL & M/s Jindal Water Infrastructure Limited for Raw Water Pipe work and Pumping System" duly signed by the representatives of the assessee and M/s Raj West Power Ltd. 49. I find that the assessee opted to pay service tax on the amounts received by it under the Erection Contract under the Composition Scheme provided under „Works Contract Service‟. However, as per the stipulatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ling composition scheme for works contract. This is contrary to their basic claim that there is a separate supply contract for materials and a contract for pure service. If the erection contract is only a service contract there is no question of availing composition scheme available to works contract service. In fact, the appellants later switched over to payment of service tax with full rate without composition. This clearly reveals that action of the appellant is with full knowledge of the legal implication of the course of action for discharging service tax by them. 12. The appellants contested the demands on limitation. We have perused the impugned order on this aspect. It is clear from the facts narrated above that the appellant is fully aware of the legal implications of service tax liability on composite works contract. Their act of first paying composition rate on what is claimed to be a service contract and later switching over to full rate of payment without composition clearly reveals the knowledge and deliberate intend of the appellant. We are not convinced with the claim of bonafideness on the part of the appellant in the present appeals. We have no reason to interfer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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