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CESTAT: Deduction from contract value impermissible where Works Contract Composition scheme opted
CESTAT rejects assessee's claim for deduction of tax payable from contract value u/s Section 67(2) of Finance Act, 1994, where service tax liability discharged by opting for Works Contract Composition Scheme
States that, Rule 3(1) of said Scheme starts with non-obstante clause indicating that Section 67 provisions may not be applicable in this case; Observes, "It is very clear that the said scheme is an optional one and once an assessee opts to discharge the service tax liability under the Composition Scheme, he has to follow the provisions in the said Composition Scheme which will not be bound by the provisions to Section 67 of the Finance Act, 1994"
Further, assessee charged an amount to service recipient as per contract entered, which would imply that service tax liability under works contract services needs to be discharged on gross amount charged without claiming any deduction; Accordingly, upholds differential duty liability along with interest, however, sets aside penalty since issue involved of interpretational nature : Mumbai CESTAT