Fact of the case: M/s. Suryodaya Infratech, is engaged in construction business and it was registered with Service Tax Dept. under the category of ‘Construction of Commercial and Industrial Buildings or Civil Structures Service’ availing abatement of 67% under Notification No. 1/2006- Service Tax dated March 01, 2006 and has been filing ST-3 returns regularly. During the course of audit, the Revenue issued a show cause notice alleging the service provided by the assessee to be falling in the category of “Works Contract” service introduced w.e.f June 01, 2017 demanding service tax of Rs. 84,31,719/- along with interest thereby invoking penal provisions under section 76,77 and 78 of Finance Act, 1994.
Assesses Contention: It had all along being paying service tax on the same service though under a different category and had also been filing returns regularly. It stated that classification of services relating to ‘construction related service’ was always a subject matter of dispute and it cannot be said that the assessee deliberately mis-classified their service to evade service tax. Assessee further submitted that, the benefit of Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007, has been wrongly denied by the Commissioner and that it has been consistently held by Courts that delay in furnishing the option, as contemplated in Rules 3(3), should not result in denial of substantive benefit of payment of Service Tax at 4% of the gross value of the service.
Held: In the case of Suryodaya Infratech vs. CCE&ST, Jaipur Hon’ble CESTAT held that that there was no deliberate act on part of assessee to evade payment of correct service tax, nor there was any suppression, as they were registered with the Service Tax Department, filing ST-3 returns and paying the tax regularly.
CESTAT further referred to the case of ABL Infrastructure Pvt. Ltd. vs. CCE, Nashik [2016 (38) STR 1185 (Tri. Mumbai)] wherein it has been held that, “in case of changed circumstances, where the activity is eligible to classification under Works Contract Service after June 01, 2007, the appellant should be given an opportunity to pay tax under Rule 3 of Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007)”. Therefore, CESTAT held that assessee was entitled to avail the composite scheme for the normal period of limitation and thereafter. Observing that assessee had paid tax under Composite Scheme along with interest, CESTAT granted liberty to adjudicating authority to verify calculation and point out discrepancy, if any to the assessee, who shall pay the same forthwith.
Citation: TS-606-CESTAT-2018-ST