Works Contract Composition Scheme benefit cannot be denied for delayed option exercise when the lapse is only procedural.

A substantive benefit under the Works Contract Composition Scheme cannot be denied merely because the option was exercised after payment had begun, where the assessee was otherwise eligible and the lapse was only procedural. The activity was treated as Works Contract Service for the disputed period, and the composition scheme under the relevant notification and rules was held applicable. Denial based solely on the absence of prior intimation was found unsustainable, so the demand was set aside and the matter remanded for fresh quantification, reconsideration of penalty, and de novo adjudication with the scheme benefit extended.

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Issues: Whether the assessee could be denied the benefit of the Works Contract Composition Scheme for delayed exercise of option under the prescribed rules.

Analysis: The activity undertaken was held to fall within Works Contract Service for the disputed period, and the composition scheme under the relevant notification and rules was applicable. The record showed that the option was exercised after payment had already commenced, but the delay was treated as a procedural lapse. Relying on the earlier Tribunal view that a substantial benefit should not be denied merely for a procedural deficiency, the denial based solely on absence of prior intimation was found unsustainable.

Conclusion: The assessee was entitled to the benefit of the Works Contract Composition Scheme, and the demand was set aside with remand for fresh quantification and reconsideration of penalty.

Final Conclusion: The impugned order was not sustained, and the matter was sent back for de novo adjudication after extending the composition scheme benefit.

Ratio Decidendi: A substantive tax benefit under the Works Contract Composition Scheme cannot be denied merely because the option was exercised belatedly, where the lapse is only procedural and the assessee is otherwise eligible under the scheme.

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