The Chandigarh Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), quashed service tax demand and observed that thework contracts are chargeable only from 01.06.2007.
The Department was of the opinion that the appellant, M/s Kumar Builders, has re-classified the services rendered by them from ‘Commercial or Industrial Construction Services’ to ‘works contract service’ even when there was no dispute about the classification; in view of the CBEC Circular No. 98/2007-ST dated 04.01.2008, it was not open for the appellants to re-classify or existing service after 01.06.2007.
Surjeet Bhadu, counsel for the appellantsubmitted that the service rendered by the appellants involves material and service and therefore, is correctly classified under Works Contract Service from 01.06.2007; in view of the judgment of the Apex Court in the case of Commissioner of C.Ex. & Cust. Kerala v. Larsen & Toubro Ltd.which was affirmed by the Apex Court in the case of M/s Total Environment Building Systems Pvt. Ltd. v. Deputy Commissioner of Commercial Taxes.
In M/s Total Environment Building Systems Pvt. Ltd. Vs. Deputy Commissioner of Commercial Taxe, the Supreme Court of India held that no service tax is payable on works contract service prior to 01.06.2007 and after 01.06.2007, the service is correctly classified under work contracts service and the appellant has rightly availed the composition scheme.
Amandeep Kumar, Authorized Representative for the Department submitted that the appellant has made contradictory submissions; on the one hand they accepted vide reply to SCN that they did a mistake in re-classifying the service from 01.06.2007.
Quashing the service tax demand, the Two-Member Bench consisting of SS Garg, Judiacial Member and P Anjani Kumar, Technical Member observed that “In view of the Apex Court judgments, works contract are chargeable only from 01.06.2007. The appellant shaving opted to pay duty under the new scheme vide their letter dated 04.06.2007 have made themselves eligible for the composition scheme under works contract service.”
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