Non-Extension of Benefit of Composition Scheme Available for WCS Questioned: CESTAT Remands Matter for Recalculation [Read Order]
The issue involved in the present case is the levy of service tax on construction of residential houses under the JNNURM scheme under WCS instead of under Construction of Residential Complex Service (CRCS).
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Hyderabad Bench, noted non-extension of benefit of composition scheme for work service contract (WCS) and questioned it. CESTAT remanded the matter for recalculation.
The issue involved in the present case is the levy of service tax on construction of residential houses under the JNNURM scheme under WCS instead of under Construction of Residential Complex Service (CRCS). Another issue is the levy of service tax in case of irrigation reservoir work and Godvari drinking water scheme. The period of dispute is from 2007-08 to 2009-10.
The adjudicating authority held that the construction of residential houses is not to be taxed under CRCS but under WCS, even though transfer of property is involved in both the services as the appellant had paid VAT.
The counsel for the appellant contested the confirmation of service tax under WCS as the appellant had claimed exemption from levy of service tax on earth work excavation and construction services relating to Kovvada Kalva Reservoir scheme awarded by I&CAD department of Government of Andhra Pradesh and on civil works relating to Godavari Drinking Water Project awarded by Greater Visakhapatnam Municipal Corporation (GVMC).
Reliance was placed on Circular No. 116/10/2009-ST dated 15.09.2009 in support that the activities of commercial or industrial construction service are chargeable to service tax if used, occupied or engaged either wholly or primarily for the furtherance of commerce or industry. It has been also argued that even the activities of WCS falling under section 65(105)(zzzza) of the Finance Act excludes works contract in respect of dams, roads, airports, railways, transport terminals and tunnels.
Since there is transfer of property in goods involved in the execution of contract and VAT has also been paid, CESTAT held that the classification has been rightly held to be under WCS. The bench also found no dispute regarding these works being related to irrigation projects and water supply projects.
A.K. Jyotishi (Technical Member) and Angad Prasad (Judicial Member) remanded back the matter for the purpose of recalculating the demand, finding no merits in the arguments by the appellant.
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