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Composition Scheme for works contract service in respect of the composite contracts executed

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2015-VIL-39-CESTAT-DEL-ST

AHLUWALIA CONTRACTS (I) LTD Vs CCE NOIDA

Service Tax – Work Contract – Disallowance of Composition Scheme for works contract service in respect of the composite contracts executed with effect from 1.6.2007 on the ground of that projects were ongoing contracts – Denial of benefit of 67% abatement under Notification No. 1/2006-ST on the ground that assessee had taken Cenvat credit of input services – HELD - The classification of service is to be determined in terms of the nature of service rendered vis-a-vis the definition of various services as applicable on the date of rendition of service. The Boards circular dated 4.1.2008 is in disharmony with law to the extent it holds that with effect from 1.6.2007 the classification cannot be changed for ongoing projects even if the service rendered is more specifically covered there under. Thus even if the classification of service prior to 1.6.2007 in respect of ongoing contracts was under CICS/CCS, the same would be classifiable as works contract service (WCS) with effect from 1.6.2007 if the service rendered was more specifically covered there under and if the classification is held to be under WCS the benefit of Notification No. 1/2006-ST would not be applicable with effect from 1.6.2007 as the said notification is not applicable to works contract service. However, the benefit of Rule 2A of the Service Tax (Determination of Value) Rules, 2006 or any other applicable notification can be claimed by the appellants subject to producing the required evidence - As regards denial of the benefit of abatement under Notification No. 1/2006-ST on the ground that the appellants had taken Cenvat credit in respect of input services, it is to be pointed out that the said notification does not debar availment of Cenvat credit on input services – Matter remanded

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