TMI Blog2024 (2) TMI 1254X X X X Extracts X X X X X X X X Extracts X X X X ..... eme and thus are in contravention of the provisions of the said scheme. It has been observed that the denial of the composition scheme by the Adjudicating Authority is only based on the change of head from Commercial or Industrial construction service to works contract service that because of which the Appellant cannot opt for payment of service tax under works contract service under the composition scheme. The activities carried out by the appellants become liable for taxation only with effect from 01.06.2007 as such activities prior to 01.06.2007 were not categorised as taxable services therefore it is inconsequential to the issue. Post introduction of the new tax entry the appellant discharged service tax in tune to the provisions applicable to them therefore their entitlement cannot be denied. The absolute identical issue that whether in case of ongoing project running from the period prior to 01.06.2007 and after 01.06.2007 whether the assessee is eligible to avail the composition scheme under works contract service form 01.06.2007 has been elaborately considered by relying upon Hon ble Gujarat High Court, in the case of JMC Project India Ltd [ 2022 (6) TMI 303 - CESTA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dustrial Construction services to the Works Contract Service for the said purpose. Both the lower authorities have confirmed the demand along with penalty against the Appellant. 1.1 Hence the present appeal. 1.2 The following issue is involved in the present appeal:- Whether the works contract composition scheme can be opted by the Appellants in respect of ongoing works contract as on 01.06.2007. 2. Shri Jigar Shah, Learned Counsel appearing on behalf of the Appellant submits that the option of availing Composition Scheme and subsequent fulfillment of Rule 3(3) is subject to the condition of Assessees service falling under the category works contract service at the time of exercise of such option that the Appellant opted for the Composition Scheme fulfilling the conditions required. He further submits that the Show Cause notice has not disputed the fact that the Appellant s activity is in nature of works contract. 2.2 As regards claiming classification under different category to avail benefit of the said Scheme, he submits that in the eyes of law the activity discharged by the appellant was not taxable for the period prior to 01.06.2007 therefore when the law pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the composition scheme. The legal position with regards to the said dispute has been settled by the Hon ble Supreme court in Larsen Toubro (supra) wherein the Apex court has held that subject to fulfilment of the conditions in terms of the Composition Scheme of 2007 the appellants are eligible to discharge service tax on such works contract post 01.06.2007. We note that the activities carried out by the appellants become liable for taxation only with effect from 01.06.2007 as such activities prior to 01.06.2007 were not categorised as taxable services therefore it is inconsequential to the issue. Post introduction of the new tax entry the appellant discharged service tax in tune to the provisions applicable to them therefore their entitlement cannot be denied. 4.1 This issue has been squarely covered by the Hon ble Tribunal in the case of B.R Kohli Construction Pvt. Ltd (supra) and Jija Builders (supra) and has held that such option can be exercised in case of ongoing projects as well. The relevant portion has been extracted below:- We find that in view of the legal position settled by the Hon'ble Supreme Court in Larsen Toubro Limited (supra) the appellant is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant was not eligible for the benefit of composite scheme for ongoing projects for which service tax paid before 01.06.2017 under Commercial or Industrial Construction Service/ Construction of Complex Service. There is no dispute on these factual issues. 4.1 We observed that that Central Board of Excise Customs vide Circular No. 128/10/2010-S.T., dated 24- 8-2010, in respect of such continuous contracts, has clarified as under: Works Contract Service tax on ongoing works contract entered into before 1-6-2007-Classification Composition scheme clarified Circular No. 128/10/2010-S.T., dated 24-8-2010 F.No. 354/141/2010-TRU Government of India Ministry of Finance (Department of Revenue) Central Board of Excise Customs, New Delhi Subject: Service tax on on-going works contracts entered into prior to 1-6-2007-Regarding. It has been brought to the notice of the Board that the following confusions/disputes prevail with respect to long term works contracts which were entered into prior to 1-6-2007 (when the taxable service, namely, Works contract came into effect) and were continued beyond that date: (1) While prior to the said date servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 HC AP ST) are in line with the above interpretation. 5. Trade Notice/Public Notice may be issued accordingly. From the above circular, it is clear that 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. In the instant case it is admitted facts that the appellant has paid service tax on ongoing projects under Commercial or Industrial Construction Services and Construction of complex service. Therefore on these 34 ongoing projects the option to pay service tax under the Works Contract (Composition Scheme for Payment of Service tax) Rule, 2007 is not available to the Appellant 4.2 We also find that, in the case of Nagarjuna Construction Co. Ltd. v. GOI-2010 (19) S.T.R. 321 (A.P.) which involved identical issue. The Hon'ble High Court, while deciding the applicability of Rule 3(3) of the Composition Scheme discussed the case of ongoing works contracts which were earlier being classified under the 'Residential Complex Services'. We reproduce the relevant Paras of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see 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 leamed 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 appellant has not challenged the validity of Rule 3(3) of the 2007 Rules and, therefore, we do not go into the said issue. In our opinion, the Impugn ..... X X X X Extracts X X X X X X X X Extracts X X X X
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