By TIOL News Service

NEW DELHI, NOV 29, 2018: THIS is a Revenue appeal.

In respect of certain taxable services provided to M/s WCL Chandarpur, it was observed that respondents had paid service tax at a lower rate under the Composition Scheme under "Work Contract Services".

However, Revenue was of the view that the services provided by the respondent were correctly classifiable under category of "Management, Maintenance or Repair Service" and benefit of composition scheme was not available.

Accordingly, the Additional Commissioner confirmed the service tax demand of Rs.40,39,101/- along with interest; imposed equivalent penalty u/s 78 as well as other penalties.

The Commissioner while upholding the proposed classification viewed that the respondent has to be extended the benefit of notification 12/2003-ST and the tax already paid needs to be appropriated against the recomputed demand.

Revenue is aggrieved and has filed an appeal before CESTAT.

The grounds specified in the appeal memo are -

i. Works Contract (Composition Scheme for payment of Service Tax) Rules, 2007, effective from 1.6.2007 is not applicable as the services provided are not "Work Contract Services";

ii. Abatement under Notification No 1/2006-ST dated 1/03/2006 is not admissible as the services provided namely "Management, Maintenance or Repair Service" are not specified services under the notification;

iii. Notification No 12/2003-ST dated 20.06.2003 is not admissible as the benefit under this notification is admissible subject to fulfillment of the conditions specified in the notification. Since these conditions are not fulfilled in the present case, the benefit under this notification is not admissible.

The AR reiterated the grounds of appeal.

The Bench observed that the only issue to be considered was whether the benefit of notification 12/2003-ST was admissible to the respondent for computing the tax payable under the category of "Management, Maintenance or Repair Service".

Adverting to the Tribunal decision in Wipro GE Medical Systems Pvt. Ltd. 2008-TIOL-2476-CESTAT-BANG (as approved by the apex court), the Bench observed that the Commissioner (A) had listed out the documents which were produced before him on the basis of which he concluded that the value of material sold during the course of providing the said services has been made available.

Upon perusing the referred documents, the CESTAT observed that the respondents had substantially complied with the requirements of the Notification No 12/2003-ST and benefit of the said Notification cannot be denied while computing the value for payment of Service Tax on the taxable services provided by them.

The Bench noted that the Revenue should have, as per the order of Commissioner (Appeal), made the calculation of the Service Tax payable after allowing the benefit of Notification No 12/2003-ST and recovered the amounts, if any, that were not paid, rather than choosing to file the present appeal.

The Revenue appeal was dismissed.

(See 2018-TIOL-3574-CESTAT-MUM)