Payment of VAT in Respect of Works Contract: CESTAT remands back matter for Fresh Adjudication [Read Order]

Payment of VAT - works contract - VAT - CESTAT - taxscan

The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Ahmedabad Bench remanded back matter for fresh adjudication in a matter in relation to the payment of Value Added Tax (VAT) in respect of works contract.

The appellant in the present matter is Anjani Excavation Operation. The issue involved in the present case is whether the contract of construction executed by the appellant is classified under Works Contract service or otherwise.

Nimish S. Desai, Counsel appearing on behalf of the appellant submits that the Adjudicating Authority has confirmed the demand of service tax denying the classification of Works Contract under composition scheme, on the ground that appellant have not produced any evidence regarding payment of Sales tax/ VAT to the State government on transfer of property relating to execution of the contract.

Prakash Kumar Singh, the Superintendent (AR) appearing on behalf of the Revenue reiterated the findings of the impugned order.

The Adjudicating Authority has denied the classification of service under Works Contract solely on the basis that appellant has not produced any evidence to show that the appellant has been paying VAT/ Sales Tax on the execution of contract. Accordingly, it was construed that in the absence of any evidence of VAT payment, the classification under Works Contract was denied and consequently the demand of service tax was confirmed.

The appellant has submitted the VAT Form 201 before the Tribunal which has made it clear that the appellant has been paying VAT to the State Government in respect of works contract.

The Coram comprising of Ramesh Nair, Member (Judicial) and C L Mahar, Member (Technical) observed that “The Adjudicating Authority has not considered the same in proper perspective. Therefore, we are of the view that the matter needs to be remitted back to the Adjudicating Authority for passing a fresh order considering all the evidences relating to VAT and on the basis of other documents if any required.”

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