The Allahabad bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) has held that claim for valuation as per Rule 2A of the Service Tax (Determination of Values) Rules, 2006 or as per Composition Scheme under Work Contract (Composition Scheme for payment of Service Tax) Rules, 2007 can be allowed only if the services provided by them are classifiable under work contract.
Shri Dharmendra Srivastava, Chartered Accountant & Shri Suhail appeared for the Appellant. Shri Santosh Kumar appeared for the Respondent.
During the Financial Year 2012-13 appellant, M/s Vishal Enterprises has received gross amount of Rs.3,83,49,884/- for the services provided by them. Appellant though registered did not pay the service tax due nor filed ST-3 return w.e.f. 2010-11.
Investigations were made and revenue viewed that the actual value of taxable services provided by appellant was suppressed, deliberately with intent to evade payment of Service Tax. It was for the investigations undertaken the evasion of Service Tax by the appellant was unearthed.
Appellant’s contention that they had not paid Service Tax during relevant period, as the tax was not leviable on the subcontractor, is not tenable, in as much as, the CBEC, vide Circular No.96/7/2007-ST Dated 23/8/2007 has clarified that a sub-contractor is also a taxable service provider.
It was evident that the service tax was required to be paid by the Sub-contractor and in view of the decision of the Larger Bench of this Tribunal in the case of CST Vs Melange Developers P. Ltd. 2020.
The appellant claimed valuation as per Rule 2A of the Service Tax (Determination of Values) Rules, 2006 or as per Composition Scheme under Work Contract (Composition Scheme for payment of Service Tax) Rules, 2007.
The tribunal ruled that the claim for valuation as per Rule 2A of the Service Tax (Determination of Values) Rules, 2006 or as per Composition Scheme under Work Contract (Composition Scheme for payment of Service Tax) Rules, 2007 can be allowed only if the services provided by them are classifiable under work contract. The bench found that the appellant was acting as a subcontractor of the main contractor providing services for which he claims to be classified under the category of ‘Works Contract Service’.
A two-member bench of Mr P K Choudhary, Member (Judicial) and Mr Sanjiv Srivastava, Member (Technical) held that the demand for the normal period of limitation will have to be upheld, by classifying the services provided by the appellant under the category of “Work Contract Services”, and by extending the benefit of 2A of the Service Tax (Determination of Values) Rules, 2006 or as per Composition Scheme under Work Contract ( Composition Scheme for payment of Service Tax ) Rules, 2007.
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