TMI Blog2022 (5) TMI 479X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellants are not in the nature of Composite Services. The Department also does not deny the fact that the services rendered by the appellants are Works Contract Services. Department mainly relies upon the Circular No. 98/1/2008-ST dated 04.01.2008 wherein it was clarified that a service provider who paid service tax prior to 01.06.2007 for the taxable services like Erection, Commissioning and Installation Service, Commercial or Industrial Construction Service or Construction of Complex Service is not entitled to change the classification of the Single Composite Service for the purposes of payment of service tax on or after 01.06.2007 and therefore, the appellants are not entitled to avail the Composition Scheme. The adjudicating authority relies on the same and concludes that the appellants have no option to switch over to the Works Contract Service and the Composition Scheme thereof. In the instant case, the appellants have been paying service tax under Construction of Complex Services etc. before 01.06.2007. On introduction of service tax on Works Contract‟, the appellants had written to the Department for clarification. They have submitted a letter on 14.06.2007 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /2022 - Dated:- 5-5-2022 - SHRI P.ANJANI KUMAR, TECHNICAL MEMBER AND SHRI P DINESHA, JUDICIAL MEMBER Shri M.S. Nagaraja, Advocate for the Appellant Shri P.Rama Holla, Authorised Representative for the Respondent ORDER MFAR Construction Private Limited, the appellants are engaged in construction of complexes and have obtained registration for rendering Commercial or Industrial Construction‟ and Construction of Complex Services‟; with the introduction of levy of Service Tax on Works Contract Service‟ w.e.f. 01.06.2007, the appellant sought classification, of the composite contract of Construction of Residential Complex‟ under Works Contract, vide letter dated 14.06.2007 and opted for composition scheme under Rule 3(3) of the Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 and started paying duty as applicable. During the conduct of audit in the year 2008, Revenue observed that in terms of Circular No.98/1/2008-ST dated 04.01.2008 a service provider who paid service tax prior to 01.06.2007 for the taxable services like Erection, Commissioning and Installation Service, Commercial or Industrial Construction Serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of two RA Bills cannot be the sole basis to conclude that the construction of residential complexes was not a Composite Contract as the fact of payment of VAT on the value of the goods involved is not in dispute. He submits that Tribunal in the case of ABL Infrastructure Limited Vs CCE C S.T., Nashik 2018 (11) GSTL 106 (Tribunal Mumbai) held that for the purpose of value of goods used in or in relation to the execution of the Works Contract value of all supplies for a consideration or otherwise should be added; Apex Court has affirmed this judgment 2018 (19) GSTL J161 (SC). 4. Learned Advocate submits that the finding that the appellants had taken service tax registration on 13.10.2004 and have been paying service tax under Construction of Commercial/ Industrial Complexes Service as defined under Section 65 (30a) and therefore, they cannot switch over to Works Contract Scheme is clearly in contradiction of the legal provisions. He extracts Rule 3(1) of the Works Contract Rules and submits that the said Rule specifically refers to the person liable to pay service tax in relation to Works Contract Service has an option to pay service tax under the Composite Scheme; w.e.f. 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received for the reason that service was to be provided; advances were received from 2005 onwards; advances received before 01.06.2007 for Works Contract is not liable to service tax; advances received after 01.06.2007 are liable to pay service tax under Works Contract and the appellants have paid tax of Rs.1,22,79,233/- out of Rs.1,42,78,233/- as recorded in the show cause notice; balance amount of Rs.19,99,033/- is confirmed by the impugned order; this balance is on account of denial of the Composition Scheme and for the reasons discussed above, the same is not maintainable. 7. Learned Advocate submits that service tax of Rs.41,44,069/- was confirmed on the Works Contract Service provided by the appellant as a sub-contractor to M/s Akkayya Consultancy Service, during the period April 2006 to March 2007. The main developer i.e. M/s Akkayya Consultancy Service have sub-contracted the construction of residential flats to the appellants named as Vasundhara, Meghana and Shalini etc; the principal contractor vide letter dated 03.09.2010 have clarified that they have paid the entire service tax for the impugned period; moreover, the same being Works Contract not liable to pay servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orks Contract Scheme from the earlier services of Construction of Residential Services. We find that Works Contract has been defined as follows: Section 64 (105) (zzzza) of the Finance Act, 1994 defines taxable service of Works Contract as under: (zzzza) to any person, by any other person in relation to the execution of a works contract, excluding works contract in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams. Explanation: For the purposes of this sub-clause, works contract means a contract wherein, (i) Transfer of property in goods involved in the execution of such contract is leviable to tax as sale of goods, and (ii) such contract is for the purposes of carrying out,- (a) Erection, commissioning or installation of plant, machinery, equipment or structures, whether pre-fabricated or otherwise, installation of electrical and electronic devices, plumbing, drain laying or other installations for transport of fluids, heating, ventilation or air-conditioning including related pipe work, duct work and sheet metal work, thermal insulation, sound insulation, fire proofing or water proofing, lift and escalator, fire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trial Construction Service or Construction of Complex Service is not entitled to change the classification of the Single Composite Service for the purposes of payment of service tax on or after 01.06.2007 and therefore, the appellants are not entitled to avail the Composition Scheme. The adjudicating authority relies on the same and concludes that the appellants have no option to switch over to the Works Contract Service and the Composition Scheme thereof. The adjudicating authority in the impugned order as well as learned Authorized Representative in his submissions relies on the ratio of Nagarjuna Construction Co. Ltd. (supra). We, however, find that the facts of the case therein are different. The issue before the Apex Court in the said case was as to whether the above cited circular was discriminatory. The Apex Court has held that the Circular is not discriminatory. Hon‟ble Court has also held that the appellant has not challenged the validity of Rule 3(3) of Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 and therefore they did not go into the said issue. However, it is worthwhile to note that the above decision was rendered before the landmark ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vide letter dated 14.06.2007, the same is not disputed by the Department who sought to deny the benefit in view of the Circular discussed above and the Circular loses its relevance after the judgment in the case of L T. We find that Tribunal has gone into very same issue in the case of B.R. Kohli Construction Pvt. Ltd. Vs CST, Delhi, 2017 (5) GSTL 182 (Tri. Delhi) and held that Composition Scheme cannot be denied to the appellants merely on the ground of discharge of service tax under different Head prior to 01.06.2007. The Tribunal held in Paragraph 4 as under: 4. We have heard both the sides and perused the appeal records. Admittedly, the contracts executed by the appellants are composite in nature and are rightly to be classified under tax entry works contract service . As held by Hon‟ble Supreme Court in Larsen Toubro Limited (supra) there is no liability to service tax in respect of indivisible, composite works contract prior to 1-6-2007. The appellants are not contesting their service tax liability under works contract service after 1-6-2007. The dispute is only relating to their entitlement to pay the said tax in terms of the composition scheme of 2007. The Orig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the relevant time and as per the understanding of such provision during the relevant time. As noted above, the appellants only contested this differential duty and penalties. No other issue is pressed during the submission by the appellant. Accordingly, we allow the appeal with reference to this differential service tax and the penalties. The appeal is accordingly disposed of. 15. In view of the above, we are of the considered opinion that the benefit cannot be denied to the appellants. We find that Tribunal and Courts have been setting aside the demands raised in respect of Composite Works Contracts after the judgment in the case of L T. The appellants have been paying duty albeit under a different Head before 01.06.2007. It would be miscarriage of justice if the appellants are denied the compounded scheme of payment of duty under Works Contract after 01.06.2007 which could have been easily exercised by those who were not paying duty before 01.06.2007. The appellants cannot be put to jeopardy for the reason that they have been paying service tax before 01.06.2007 though they were not legally required to pay in view of the judgment in the case of L T. 16. Coming to the othe ..... 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