TaxTMI 
TaxTMI 
2014 (6) TMI 831
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.... of the contract began in July 2007 and even some advances were received by the appellant from M/s. Essar Oil Limited prior to 01.6.2007 but no service tax was paid prior to 01.6.2007. It is the case of the appellant that the condition of Rule 3(3) of the 'Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007', as explained by CBEC in their Circular dated 24.08.2010, was entirely fulfilled and service tax @ 2% (later enhanced to 4% with effect from 01.3.2008) was correctly paid under Works Contract Services. 3. Shri V.K. Jain (Advocate) appearing on behalf of the appellant argued that adjudicating authority has given contrary findings in Para 25 of the Adjudication order dated 18.10.2012/ 19.10.2012. That on one hand Adjudicating authority says that Appellant, prima facie, seems to be eligible for Composition Scheme and in the same breath says that the intention behind CBEC Circular dated 24.08.2010 does not appear that a defaulter should get the benefit of Composition Scheme. Learned advocate argued that findings of the Adjudicating authority are contrary to the well settled principles of law that fiscal statues have tot be read according to the plain languag....
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....here the entire situation is Revenue neutral. 4. Shri K. Sivakumar (AR) appearing on behalf of the Revenue and though written submission defended the order passed by the Adjudicating authority and argued that commencement of services started prior to 01.6.2007 and even service tax was also payable but the same was not paid/ shown in the returns filed by the appellant with the Revenue for the period prior to 01.6.2007. It was also his case that both, Construction Contract and Supply Contract has to be considered as one and values of both the contracts need to be clubbed as per the Income Tax Appellate Tribunal, Rajkot Bench in the case of Essar Oil Limited in the case of Essar Oil Limited vs. Income Tax Officer [(2001) 77 ITD 92 (Rajkot)]. 5. Heard both sides and perused the case records. The main issue required to be decided in the present proceedings is whether appellant is entitled to Composition Scheme under the provisions of 'Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007' (effective from 01.6.2007) when the contracts for rendering services was entered before 01.6.2007 and part of the services were also rendered before 01.6.2007. The Advance paymen....
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....ing into effect from 1-6-2007, such contracts would be eligible for opting of the composition scheme. 4. The Board's previous Circular No. 98/1/2008-S.T., dated 4-1-2008 and the ratio of judgment of the High Court of Andhra Pradesh in the matter of M/s. Nagarjuna Construction Company Limited v. Government of India [2010 (19) S.T.R. 321 (A.P.) - 2010 TIOL 403 HC AP ST] are in line with the above interpretation. 5.3 Hon'ble Appex Court in the case of Nagarjuna Construction Company Limited vs. GOI (supra) while interpreting the applicability of Rule 3(3) of the 'Works Contracts Rules 2007', has made the following observation in Para 27 to 30:- 27. On perusal of Rule 3(3) of the 2007 Rules it is very clear that the assessee who wants to avail of the benefit under Rule 3 of the 2007 Rules must opt to pay service tax in respect of a works contract before payment of service tax in respect of the works contract and the option so exercised is to be applied to the entire works contract and the assessee is not permitted to change the option till the said works contract is completed. 28. In the instant case it is an a....
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....where service tax was payable but not paid by the assessee. In the absence of any such provision in the Composition Scheme introduced under Works Contract Rules, 2007, it will not be correct to hold that intention behind the scheme should be seen when no such intention is coming out of the legal provisions of Rule 3(3). Appellant has, therefore, correctly availed the Composition Scheme for the Works Contracts for which the option and payment of service tax was exercised after 01.6.2007 and no service tax was paid before 01.6.2007. 7. So far as adding the value of Supply Contract to the Service Contract is concerned, this Bench has already taken a view that such clubbing cannot be done as per our order No. A/10908-10909/WZB/HAD/2013 dated 11.7.2013 in the case of Essar Projects (India) Limited vs. CCE & ST, Rajkot in appeal No. ST/10138 of 2013. 8.1 Ld.A.R. has relied upon a CBEC Circular No.98/1/2008-ST, dt.04.01.2008 for contending the said Circular bars an assessee from claiming the benefit of Composition Rules 2007 for the works contract services provided after 01.06.2007, if tax at the full standard rate (and not the composition rate) had become payable on a part of the contr....
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....cial & Industrial Construction Services' (CISC), the remaining four tasks/services may be classified under 'Works Contract Service' the same having been provided after 01.06.2007. In respect of the task/service completed prior to 01.06.2007, if part of the consideration was received before 01.06.2007 and part thereafter, whether for that part of the consideration received after 01.06.2007, the composition scheme could be claimed was the only question considered by the CBEC in Circular dt.04.01.2008. It is in this context that CBEC Circular clarified that a single composite service covered by the first task/service could not be vivisected, so that a part of its value is classified as 'Works Contract Service' merely by reason of the consideration being received after 01.06.2007. In this illustration, the 'Works Contract Service' is a reference to the services covered by the remainder four tasks/services performed after 01.06.2007. The task/service which was already performed prior to 01.06.2007 is not regarded, for the purposes of the Finance Act, 1994, as 'Works Contract Service' and therefore in respect of the service covered by such a task, there can never be an option available t....
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.... the composition scheme under the 2007 Rules is available [subject to the exercise of option and the conditions of eligibility for exercise of such option as spelt out in Rule 3(3)] only in relation to 'works contract service', as defined in Rule 2(c) as meaning service provided in relation to execution of the works contract referred to in sub-clause (zzzza) of Clause 105 of Section 65 of the Act. 25. The impugned circular merely reiterates the eligibility criterion specified in Rule 3(3), as the condition precedent for entitlement to exercise an option for coming within the composition; scheme, while impliedly recognizing that certain taxable services earlier falling within Clauses (zzd), (zzq) and (zzzh) of Sec. 65 (105) may now fall within the recently introduced Clause (zzzza); of Sec. 65(105) (amendment w.e.f. 1-6-2007), in the light of the criteria for classification of taxable services spelt out in Section 65A of the Act. (emphasis ours) 8.3 In the present case, it is not in dispute that in respect of the services provided after 01.06.2007, which alone are regarded as 'Works Contract Service', the appellant....