The Chennai bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has upheld the right of a construction company to avail the composition scheme under service tax even without filing a mandatory declaration. The tribunal quashed a demand order issued by the revenue department seeking service tax on the entire value of a Works Contract.
The case was filed by M/s. Sri Mookambigai Constructions India Pvt. Ltd. against the Commissioner of GST & C. Ex, Coimbatore. The appellant had challenged two orders-in-appeal issued by the Commissioner of Customs, Central Excise and Service Tax (Appeals) Coimbatore.
The issue was whether the appellant was liable to pay service tax on the entire value of the Works Contract for the disputed period due to their failure to file a declaration with the jurisdictional authority indicating their intention to opt for the composition scheme.
The appellant, represented by J. Shankararaman, argued that they had obtained registration under various services and were discharging service tax under Works Contract Services as per the composition scheme.
The counsel contended that the requirement to file a declaration before the jurisdictional authority to intimate the option of availing the composition scheme was merely procedural and should not deny them the benefit of the scheme.
The department, represented by M. Selvakumar and Harendra Singh Pal, argued that the appellant had not complied with the procedural requirement to file a declaration for availing the composition scheme and hence was liable to pay service tax on the entire value of the Works Contract.
The tribunal, comprising Sulekha Beevi.C.S (Judicial Member) and Vasa Seshagiri Rao (Technical Member), relied on various decisions, including the jurisdictional High Court’s ruling in GE T & D India Ltd., which held that the requirement to file a declaration was only procedural in nature and the benefit of the composition scheme could not be denied on such grounds.
The tribunal set aside the demand order and concluded that the demand for service tax on the entire value of the Works Contract was unsustainable.
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