2019 (5) TMI 1103 - AT - Service Tax

Tribunal sets aside Orders-in-Original, ruling in favor of appellant on service tax compliance

The Tribunal ruled in favor of the appellant, setting aside all four impugned Orders-in-Original. It held that the extended period of limitation was not ... Works Contract Service - Composition Scheme - vivisection of service portion of the works contract - Rule 2A of Service Tax (Determination of Value) Rules, 2006 - HELD THAT:- The reliance for issuance of SCN is placed on ST-3 returns filed by the appellant. From the SCN and the Order-in-Original, we could not come across any contention to establish that there was any observation that any information submitted in the said ST-3 return was not proper - Hon’ble Supreme Court of India in the case of M/S. UNIWORTH TEXTILES LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE. RAIPUR [2013 (1) TMI 616 - SUPREME COURT] has held that the positive action with a negative intention of wilful and deliberate default is a mandatory prerequisite to conclude wilful misstatement or suppression in order to invoke extended period. Tribunal in the case of GUJARAT STATE PETRONET LTD. VERSUS COMMR. OF CUS. & C. EX., AHMEDABAD [2014 (1) TMI 1096 - CESTAT AHMEDABAD] by relying on the ruling of Hon’ble Supreme Court in the case of COLLECTOR OF CENTRAL EXCISE VERSUS CHEMPHAR DRUGS & LINIMENTS [1989 (2) TMI 116 - SUPREME COURT] has held that there should be deliberate default of information which are required to be disclosed to invoke extended period of limitation. ST-3 returns were regularly filed and there was no observations made in the proceedings that information was lacking in the said ST-3 returns and there was no observation that the incomplete or incorrect information was submitted through ST-3 returns. Therefore, the extended period of limitation was not available to revenue - SCN issued by invoking the extended period of limitation. Appeal allowed - decided in favor of appellant. Issues:- Classification of contract under Works Contract Service- Application of extended period of limitation- Correctness of service tax calculation- Compliance with composition scheme for service tax paymentClassification of contract under Works Contract Service:The appellant entered into a contract for setting up Thermal Power Plants and availed Cenvat credit for services rendered by sub-contractors. The issue arose when the Central Excise Officers alleged that the appellant did not opt for the works contract composition scheme, leading to incorrect classification and payment of service tax. The show cause notices invoked Section 73 of the Finance Act, 1994, for the period under dispute. The appellant argued that separate components in the contract allowed for individual classification and tax payment. The Original Adjudicating Authority partially confirmed the demand, leading to the appeals before the Tribunal.Application of extended period of limitation:The appellant contended that the extended period of limitation was not applicable as they regularly filed ST-3 returns, and there was no evidence of suppression or misstatement. The Tribunal noted that the positive action with a negative intention of willful default is necessary to invoke the extended period. Relying on case laws, the Tribunal held that since the ST-3 returns were regularly filed without any incomplete or incorrect information, the extended period of limitation was not justified. As the show cause notices were issued invoking the extended period, the Tribunal set aside all four impugned Orders-in-Original.Correctness of service tax calculation:The appellant argued that the Original Adjudicating Authority's findings were contradictory, as they correctly paid service tax for certain services but faced disputes regarding Civil Construction Service. The Authority calculated service tax based on the entire contract value, leading to discrepancies. The appellant maintained that they filed ST-3 returns separately and paid tax accordingly, with no allegations of incorrect entries. The Tribunal found the Authority's approach flawed and lacking a finding on the extended period of limitation, ultimately ruling in favor of the appellant.Compliance with composition scheme for service tax payment:The appellant asserted that they followed the composition scheme for service tax payment, and any allegations of non-compliance were unfounded. They argued that the composition scheme did not require a specific procedure other than reflecting the option in the service tax returns. The Tribunal considered the appellant's submissions and found no evidence of willful defiance or intention to evade tax, supporting the appellant's compliance with the composition scheme and rejecting the revenue's claims of extended period applicability.This detailed analysis of the judgment highlights the key issues, arguments presented, and the Tribunal's decision on each aspect, ensuring a comprehensive understanding of the legal proceedings and outcomes.