By TIOL News Service

MUMBAI, DEC 19, 2016: THE appellant is engaged in providing the service of 'Erection, Installation and Commissioning'. In respect of one project of M/s Meenakshi Energy Pvt. Ltd they opted for composition scheme under 'Works Contract' vide letter dated 11/03/2010. Thereafter, vide letter dated 22/03/2010 the option for payment of service tax under composition scheme was withdrawn.

The appellant, thereafter, discharged service tax without availing the composition scheme and claiming abatement of 67% in terms of notification 1/2006-ST.

A show cause notice was issued demanding the difference of service tax payable as per composition scheme and actually paid by them on the ground that once the option for composition scheme has been availed, the appellant cannot withdraw from the same.

The demand was upheld by the lower authorities, therefore, the appellant is before the CESTAT.

The appellant narrated the facts and submitted that exercising of option of composition scheme and withdrawal thereof was made before the execution of the project as well as payment of first installment of service tax, therefore, there cannot be any objection for such withdrawal. It was also emphasized that the demand is hit by limitation as the department was informed of their opting out of the Composition scheme on 22/03/2010 but the SCN was issued only on 02/04/2014.

The AR while reiterating the finding of the impugned order placed reliance on the decision of the Tribunal in Sunraj Construction - 2015-TIOL-2764-CESTAT-MUM.

The Bench noted that the case could be disposed of on the ground of limitation. Inasmuch as it was observed thus-

“7. I find that the appellant has opted for the composite scheme under works contract on 11/03/2010 and thereafter on 22/03/2010 they submitted a letter for withdrawal of the composite scheme. As per these two letters they have discharged the service tax during the period 2010-11. In view of these facts the show cause notice should have been issued within the normal period of one year as prescribed under section 73(1), whereas the show cause notice for the period 2010-11 was issued on 02/04/2014 i.e. after prescribed limit of one year. As per the above fact, there is no suppression of fact on the part of the appellant. Therefore, the demand raised in the show cause notice is clearly time-barred.”

The order was set aside and the appeal was allowed on limitation without going into the merit of the case.

(See 2016-TIOL-3269-CESTAT-MUM)