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ST Composition Scheme under Works Contract Service

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2015-VIL-625-CESTAT-MUM-ST

Service Tax – Composition scheme under Works Contract Service – Delay in taking registration – Service Tax demand at normal rate by disallowing the benefit of composition scheme

HELD

– In this case there is no violation of the Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007. Rule 3 of the Rules require that the option to pay tax under composition scheme should be exercised before payment of Service Tax. It is seen that the registration under Works Contract Service was taken on 29.06.2007 and the Service Tax was paid on 5th/6th July, 2007. In view of this fact as well as the fact that under Rule 4 of Service Tax Rules the registration may be applied for within 30 days of commencement of business, the show-cause notice has no basis.

The adjudicating authority proceeded to pass the Order on a completely fresh ground and therefore the order is liable to be set aside on this ground alone - in the absence of any evidence to show that the new contract was merely an eye wash is not supported by any documentary evidence. No proof is forthcoming from the records that the earlier contract was cancelled and fresh contract signed on 06.06.2007 merely to avail the benefit of a composition scheme which came into effect on 01.06.2007 - demand is not sustainable and revenue appeal is dismissed

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