Works contract composition scheme benefit before the cut-off date led to remand for fresh adjudication

A works contract that commenced before the 07.07.2009 cut-off could not be denied the benefit of the unamended composition scheme unless it was shown that the work had not begun before that date; the assessee's works order was dated 15.11.2008, so the amended scheme was inapplicable on the stated facts. For the remaining works contract demands, the assessee had not earlier filed a reply or produced supporting documents, so a proper opportunity to place its defence on record was required. The works contract service demand was set aside and remanded for de novo adjudication, while the demand for management consultancy services remained undisturbed.

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Issues: Whether the demand of service tax on works contract services was liable to be set aside and the matter remanded for fresh adjudication, including the question whether the assessee was entitled to the benefit of the unamended composition scheme for a works contract commenced before 07.07.2009.

Analysis: The amended composition scheme provisions were held inapplicable to a works contract that had commenced or for which payment had been made on or before 07.07.2009. The works order relevant to the dispute had been obtained on 15.11.2008, so the assessee could not be denied the benefit of the earlier regime unless it was shown that the work had not commenced before the cut-off date. For the remaining works contract demands, the assessee had not earlier filed a reply to the show cause notice or produced supporting documents, and was entitled to a proper opportunity to place its defence and documents on record.

Conclusion: The demand relating to works contract services was set aside and the matter was remanded to the adjudicating authority for de novo adjudication. The demand relating to management consultancy services remained undisturbed.

Ratio Decidendi: Where a works contract had commenced before the cut-off date fixed by the amended composition scheme, the assessee could not be denied the benefit of the unamended provisions absent proof to the contrary, and denial of a proper opportunity to respond warranted remand for fresh adjudication.

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