JUDGMENT : Harish Tandon, J. Assailing the order dated 9th May, 2014 passed by the Commissioner of Service Tax, Kolkata confirming the demand of the service tax amounting to Rs. 7,33,25,754/- under proviso to sub-section 2 of Section 73 of the Finance Act, 1994 and an equal amount of penalty together with the interest, the petitioner has filed the instant writ petition. The petitioner has further sought for declaration that the Notification No. 7 of 2008 dated 1st March, 2008 enhancing the rate of service tax from 2% to 4% which was further enhanced to 4.8% by Notification No.10 of 2012 dated 17th March, 2012 to be illegal, ultra vires to the Finance Act, 1994 and the Constitution of India. 2. The facts, which are more or less undisputed, are adumbrated as below: The petitioner entered into several works contract in the year 2006 & 2007 on a turnkey basis. After coming in force of the Works Contract (Composite Scheme for Payment of Service Tax) Rules, 2007 (herein after referred to as the composite scheme), the petitioner exercised an option under the said scheme and admittedly paid the service tax @ 2% as provided therein. Admittedly the petitioner submitted ST-3 returns for the period from March 2008 to 2011-2012 showing the payment of service tax @ 2% in respect of the services rendered under the works contract. In course of the scrutiny, it was revealed that the petitioner paid the service tax on the value of the works contract @ 2% under the said composite scheme after exercising the option on 26th March, 2008. By notification no. 7 of 2008 dated 1st March, 2008, the rate of service tax was enhanced from 2% to 4% with effect from the date of the notification. Because of the alleged discrepancy, the Commissioner of Service Tax issued a show cause notice cum demand dated 17th April, 2013 demanding the short payment of the service tax amounting to Rs. 7 Crores and odd with interest and penalty. The stand of the department in the said show cause notice, as discernible therefrom, is that after the enhancement of rate of service tax from 2% to 4% and the petitioner having exercised the option on 26th March, 2008, the payment @ 2% of the service tax on the works contract amounts to evasion of the tax. The stand of the department in the said show cause notice, as discernible therefrom, is that after the enhancement of rate of service tax from 2% to 4% and the petitioner having exercised the option on 26th March, 2008, the payment @ 2% of the service tax on the works contract amounts to evasion of the tax. The department further invoked the extended period of limitation as the petitioner suppressed the date of exercise of option and continued to pay service tax at the old rate. A further show cause notice was issued on 21st October, 2013 for evasion of the service tax as the rate of service tax was further enhanced to 4.8% on the basis of the notification dated 17th March, 2012 effective from 1st April, 2012. A further demand was raised for a sum of Rs. 3,17,295/- along with the interest and penalty. Though separate replies were given to the aforesaid show cause notices cum demand but the stand appears to be identical. 3. It is categorically stated by the petitioner that the composite scheme which came into effect from 1st June, 2007 gives an option to the service tax provider under the works contract to pay service tax in relation thereto by paying an amount equivalent to 2% of the gross amount charged for the works contract. The said composite scheme puts an embargo on the provider to resile from the said scheme until the completion of the said works contract. It is thus stated that once the service provider exercised an option under the said composite scheme, the rate of service tax at the time of option would continue for entire works contract period and, therefore, any change in the rate of tax on the basis of the subsequent notifications is impermissible, illegal and hit by doctrine of promissory estoppel. 4. The Commissioner of Service Tax, Kolkata rejects the contention of the petitioner as the petitioner exercised the option on 26th March, 2008 when the rate of service tax was altered from 2 % to 4% and having continued to pay the service tax at the unamended rate confirmed the demand and imposed penalty of like amount with further direction to calculate the interest under Section 75 of the Finance Act, 1994. It further came out from the record that the petitioner has approached the Madras High Court challenging a notification dated 1st March, 2008 and an interim order was passed therein. The parties are unison on the fact that the writ petition filed before the Madras High Court is still pending. 5. The issues, which are broadly raised in this writ petition, are firstly; that the notification dated 1st March, 2008 and 17th March, 2012 cannot be given a retrospective effect after an option is exercised and is, therefore, repugnant and/or contrary to the composite scheme offending under Section 94 of the Finance Act, 1994. Secondly, the purported notification, in effect, have rendered the composite scheme unreasonable and unworkable offending Article 14, 19 (i) (g) and 265 of the Constitution of India. Thirdly, enhancing the rate by a subsequent notification after the parties are allowed to alter the position is hit by principle of promissory estoppel and fourthly, the show cause notice was palpably barred by limitation and no ground exists for invocation of the extended period. 6. The imposition of tax on the works contract was a center of debate because of its peculiar nature and indivisibility, imbibing several elements including labour services and materials. 7. There was a divergent of views on interpretation of the word "sale" for the purpose of imposition of the sales tax in relation to the goods involved in execution of the works contract. Entry 48 in List II in the Seventh Schedule of the Government of India, 1935 was retained with some modifications under Entry 92 of List I of the Seventh Schedule and Entry 54 in List II of the Seventh Schedule to the Constitution. The Supreme Court in case of State of Madras v. Gannon Dunkerley & Co. (Madras) Ltd; reported in AIR 1958 SC 560 held that the expression "sale of goods" should be assigned the same meaning as given in Sale of Goods Act, 1930. It is further held that because of its compositeness and indivisibility, there cannot be the sale of goods as the contractor is to construct the building according to the specification enshrined in the contract and the provincial legislature or the Parliament is not competent to impose tax on supply of the materials used in execution of the building contract treating the same as sale. However, it was clarified therein that in the event, the parties have entered into a distinct and separate contracts i.e. one for transfer of materials on consideration and other for rendering services and the work done on payment of money, it would amount to a distinct and separate contract and the power of the State to impose tax is beyond any doubt. The Constitution Bench in the above report made certain suggestions and/or recommendations which led to 46th Amendment having brought in the Constitution. By the said 46th Amendment, Clause 29A was inserted under Article 366 and simultaneously Clause 3 of Article 286 was substituted by a new clause. The 46th Amendment was challenged before the Supreme Court under Article 32 of the Constitution of India basically on two fold grounds namely— (i) the said amendment was unconstitutional for the reason that it had not been ratified by the legislatures of not less than one half of the States by resolutions passed to that effect before the Bill was presented to President for assent and; (ii) it was not open to the States to ignore the provisions contained in Article 286 of the Constitution and the provisions of the Central Sales Tax Act, 1956 while making assessment under the sales tax laws passed by the legislatures of the States. 8. So far as, the amendment in the Constitution was concerned, the Supreme Court upheld the constitutionality thereof. But on the second objection, it was held that sales tax laws passed by the legislatures of States levying taxes on the transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract are subject to the restrictions and conditions mentioned in each clause or sub-clause of Article 286 of the Constitution. It is, however, held that the state's competence to levy the tax on an indivisible and composite works contract was not conferred prior to the said amendment but it is made divisible by legal fiction into one for sale of goods and other for supply of labour services. 9. By an amendment in the Finance Act, 1994, the works contract have been brought within the purview of the taxable services by introducing clause zzzza under sub-section 105 of section 65 of the said Act. 9. By an amendment in the Finance Act, 1994, the works contract have been brought within the purview of the taxable services by introducing clause zzzza under sub-section 105 of section 65 of the said Act. The Works Contract "Composite Scheme for Payment of Service Tax" Rules 2007 was introduced in exercise of the power conferred under Section 93 & 94 of the Finance Act, 1994 providing an option to a person liable to pay service tax in relation to works contract to discharge the service tax liability on the works contract service provided or to be provided, instead of paying the service tax at the rate specified in section 66 of the said Act, an amount equivalent to 2 % of the gross amount charged for the works contract. The said composite scheme was made effective from 1st June, 2007. A further embargo is created therein that the person who opts under the said scheme shall not take the CENVAT credit of duties or cess paid on any inputs, used in or in relation to the works contract under the CENVAT Credit Rules and shall not be allowed to recile from the said scheme during the entire works contract. The said scheme is immuned from the purview of Section 67 of the Finance Act, 1994 and Rule 2A of the Service (Determination of Value) Rules, 2006 because of the non-obstante clause incorporated therein. It would be profitable to quote the said Rules, which runs thus: "Government of India Ministry of Finance (Department of Revenue) New Delhi, the 22nd May, 2007, 1 Jayistha, 1929 Notification No. 32/2007-Service Tax G.S.R. (E) In exercise of the powers conferred by sections 93 and 94 of the Finance Act, 1994 (32 of 1994), the Central Government hereby makes the following rules, namely:- 1. Short title and commencement- (1) These rules may be called the Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007. (2) They shall come into force with effect from the 1st day of June, 2007. 2. Short title and commencement- (1) These rules may be called the Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007. (2) They shall come into force with effect from the 1st day of June, 2007. 2. Definitions- In these rules, unless the context otherwise requires- (a) "Act" means the Finance Act, 1994 (32 of 1994); (b) "section" means the section of the Act; (c) "works contract service" means services provided in relation to the execution of a works contract referred to in sub-clauses (zzzza) of clause (105) of section 65 of the Act; (d) words and expressions used in these rules and not defined but defined in the Act shall have the meanings respectively assigned to them in the Act. 3. (1) Notwithstanding anything contained in section 67 of the Act and rule 2A of the Service (Determination of Value) Rules, 2006, the person liable to pay service tax in relation to works contract service shall have the option to discharge his service tax liability on the works contract service provided or to be provided, instead of paying service tax at the rate specified in section 66 of the Act, by paying an amount equivalent to two per cent of the gross amount charged for the works contract. (2) The provider of taxable service shall not take CENVAT credit of duties or cess paid on any inputs, used in or in relation to the said works contract, under the provisions of CENVAT Credit Rules, 2004. (3) The provider of taxable service who opts to pay service tax under these rules shall exercise such option in respect of a works contract prior to payment of service tax in respect of the said works contract and the option so exercised shall be applicable for the entire works contract and shall not be withdrawn until the completion of the said works contract." (G.G. Pai) Under Secretary to the Government of India" 10. The petitioner says that once an option is exercised by the tax provider under the said Rules, he cannot resile therefrom for the entire period of works contract and also cannot claim the CENVAT credit of duties and cess paid on any inputs used in or in relation to the works contract under the CENVAT Credit Rules, 2004. The petitioner says that once an option is exercised by the tax provider under the said Rules, he cannot resile therefrom for the entire period of works contract and also cannot claim the CENVAT credit of duties and cess paid on any inputs used in or in relation to the works contract under the CENVAT Credit Rules, 2004. According to the learned Advocate for the petitioner, a choice was given to the service provider to take a decision in its commercial wisdom by exercising the option to avoid the cumbersome procedure for payment of the service tax on the component of the materials or sale of goods or transfer of material in goods used in works contract by paying an uniform rate of service tax on the entire works contract and, therefore, any enhancement of the rate of tax subsequent to the exercise of an option, after a person has altered his position is hit by the principle of promissory estoppel. The rate of service tax at the time of promulgation of the said rules was 2% on the works contract which was subsequently enhanced to 4% with effect from 1st March, 2008 and further enhanced at 4.8% with effect from 1st July, 2012. 11. The parties are not ad idem on the facts when an option was exercised by the petitioner. According to the petitioner, the mode of option is to be exercised by paying an amount equivalent to 2% of the gross amount charged for the works contract prior to the payment of service tax in respect of the said works contract and not by issuing a letter signifying the exercise of such option to the authority. According to the authorities, since the petitioner intimated about such option by issuing a letter dated 26th March, 2008, the said option shall be deemed to have been exercised on the said date and, therefore, the rate of service tax prevalent on the said date is required to be paid by the petitioner. 12. In other words, the Respondent says that the option was exercised for the first time by issuing a letter dated 26th March, 2008 and not prior thereto and therefore the rate of tax applicable under the said composite scheme on the date of exercise of option shall apply and not the rate of tax when the return was filed. 12. In other words, the Respondent says that the option was exercised for the first time by issuing a letter dated 26th March, 2008 and not prior thereto and therefore the rate of tax applicable under the said composite scheme on the date of exercise of option shall apply and not the rate of tax when the return was filed. According to the Respondent, once the parties exercised an option under the said composite scheme the embargo becomes immediately active and shall operate through out the works contract which cannot be construed that the rate of tax should remain static through out the period of works contract. The challenge to the aforesaid notifications by which the rate of taxes were changed are basically founded on the premise that the amendments cannot operate retrospectively. There is no argument advanced at the Bar that the authority lacks competence to vary or amend the rate of tax at any point of time. What is sought to be contended before the Court is that once the composite scheme provides that after the option is exercised by the assessee the composite scheme should remain operative through out the works contract and cannot be withdrawn until completion thereof. The changes in the rate of tax having brought subsequently by way of an amendment cannot impair the vested right by virtue of its operation from the retrospective date. The composite scheme was framed in exercise of the power under Sections 93 and 94 of the Finance Act, 1994 by the Central Government. The Finance Minister in its budgetary speech proposed the optional composition scheme under the Service Tax to be levied on total value of the works contract. The object for framing such optional scheme was to avoid the maintenance of the voluminous records and dissecting services exigable to tax from the transfer of property of goods involved in execution of the works contract. It is an alternative, simplified and hassle free method of assessment of the tax payable and aim to have a different route but to arrive at the same destination. It is really in the nature of a contract as the department made an offer to the dealers under the works contract to agree or not to agree. It is an alternative, simplified and hassle free method of assessment of the tax payable and aim to have a different route but to arrive at the same destination. It is really in the nature of a contract as the department made an offer to the dealers under the works contract to agree or not to agree. Once the dealer exercises an option and agreed to be taxed under the composite scheme, it becomes binding and therefore the department as well as the dealer cannot resile from the said contract. Once the option is exercised it partakes a character of a unit of assessment under the said scheme and shall remain in force through out the period of works contract. The other salient feature of the said composite scheme is that the provider of taxable service is precluded from availing the CENVAT credit of duties or cess paid on any inputs used in or in relation to the works contract. It admits no ambiguity to say that once the provider of the taxable services have opted under the said scheme, the said scheme would remain operative through out the period of works contract as no choice is left to such provider if the said composite scheme at a later point of time is not beneficial to his interest and should be taxed under the normal procedure. The amendment in the rate of tax is within the legislative competence and cannot be impugned as it is intended to operate retrospectively. The notification by which the rate of taxes under the composite scheme was subsequently amended clearly indicates that it would come into force from the date of its publication in the official gazette and in the subsequent notification dated 17th March, 2012, it is expressed that it would come into force on and from 1st April, 2012. Being an alternative method of achieving the same goal it is definitely not controlled by Section 67 of the Act or Rule 2A of the Service Tax (Determination of Value) Rules, 2006. 13. This Court, therefore, does not find any lack of competence to vary and/or amend the rate of tax by the competent authority but such rate would be applicable prospectively and shall not affect the pending works contract. 13. This Court, therefore, does not find any lack of competence to vary and/or amend the rate of tax by the competent authority but such rate would be applicable prospectively and shall not affect the pending works contract. The question is still begging an answer when the Petitioner exercised an option under the said scheme as both the Petitioner and the Respondent are at variance on the date of exercise of such option. Sub Rule 3 of Rule 3 of the composite scheme clearly provides that the option should be exercised in respect of works contract prior to the payment of the service tax in respect of the said works contract and such option shall remain applicable for the entire works contract and shall not be permitted to be withdrawn until the completion thereof. It is, therefore, explicit that there is no prescribed mode for exercising such option. Rule 6 of the Service Tax Rules provides that the service tax shall be paid on or before 6th of every month following the month the payments are received for such taxable service. Rule 7 thereof postulates that the return shall be filed on half yearly basis on or before 25th day of the month following the particular area. 14. In the present case, the service tax was paid at the rate of 2% and was duly received by the department prior to 01.03.2008. The expression 'opts to pay service tax under these rules' cannot be construed and mean the filing of the return and the payment would sufficiently constitute the exercise of option under composite scheme. Apart from relying upon Rules 6 and 7 of the Service Tax Rules there is no iota of piece of paper produced before this Court that an option was exercised prior to 26.03.2008 by payment of the service tax under composite scheme. The authorities have proceeded that since the option was exercised for the first time on 26.03.2008 the Petitioner cannot claim that he would still be liable to pay the tax at the rate of 2% under the said composite scheme and not at the rate of 4% subsequently changed on and from 1st March, 2008. If the rate which was applicable as on the date of exercising an option such rate would continue for the entire period of the works contract. If the rate which was applicable as on the date of exercising an option such rate would continue for the entire period of the works contract. This Court finds substance in the submission of the Petitioner that the change in a rate of tax subsequent to exercising an option under the said composite scheme cannot operate retrospectively as the rule of the game cannot be changed once it is played. 15. It admits no ambiguity to say that the rights accompanied under the beneficial scheme cannot be abridged or taken away by virtue of later notifications. Once the scheme postulates that the assessee cannot wriggle out therefrom after exercising an option, the change in rates subsequent thereto cannot affect the right under the said beneficial scheme until the entire period of works contract. 16. The Respondent is banking upon the works contract entered into by and between the Petitioner and the Godrej Waterside Properties Pvt. Ltd. wherein the Petitioner was conscious that the rate of tax may vary in course of the works contract and incorporated a clause that any changes in existing VAT and service taxes and new taxes being levied during currency of the contract, the same would be paid to the Petitioner. The said clause, in my opinion cannot help the department for the purpose of construction of the composite scheme. There is a freedom of contract between two individuals unless it is against the public policy. The contract remain binding between the contracting parties which cannot be necessarily borrow an independent and distinct contract by necessary implication. 17. In this regard the reference can be safely placed upon a judgment of the Supreme Court in case of Rashtriya Ispat Nigam Ltd. v. Dewan Chand Ram Saran reported in (2012) 26 STR 28 wherein it is held :- "26. As far as the submission of shifting of tax liability is concerned, as observed in paragraph 9 of Laghu Udyog Bharati (supra), service tax is an indirect tax, and it is possible that it may be passed on. Therefore, an assessee can certainly enter into a contract to shift its liability of service tax. As far as the submission of shifting of tax liability is concerned, as observed in paragraph 9 of Laghu Udyog Bharati (supra), service tax is an indirect tax, and it is possible that it may be passed on. Therefore, an assessee can certainly enter into a contract to shift its liability of service tax. Though the appellant became the assessee due to amendment of 2000, his position is exactly the same as in respect of Sales Tax, where the seller is the assessee, and is liable to pay Sales Tax to the tax authorities, but it is open to the seller, under his contract with the buyer, to recover the Sales Tax from the buyer, and to pass on the tax burden to him. Therefore, though there is no difficulty in accepting that after the amendment of 2000 the liability to pay the service tax is on the appellant as the assessee, the liability arose out of the services rendered by the respondent to the appellant, and that too prior to this amendment when the liability was on the service provider. The provisions concerning service tax are relevant only as between the appellant as an assessee under the statute and the tax authorities. This statutory provision can be of no relevance to determine the rights and liabilities between the appellant and the respondent as agreed in the contract between two of them. There was nothing in law to prevent the appellant from entering into an agreement with the respondent handling contractor that the burden of any tax arising out of obligations of the respondent under the contract would be borne by the respondent. 27. If this clause was to be read as meaning that the respondent would be liable only to honour his own tax liabilities, and not the liabilities arising out of the obligations under the contract, there was no need to make such a provision in a bilateral commercial document executed by the parties, since the respondent would be otherwise also liable for the same. In Bank of India (supra) one party viz. the bank was responsible for the formulation of the Voluntary Retirement Scheme, and the employees had only to decide whether to opt for it or not, and the principle of contra proferentem was applied. In Bank of India (supra) one party viz. the bank was responsible for the formulation of the Voluntary Retirement Scheme, and the employees had only to decide whether to opt for it or not, and the principle of contra proferentem was applied. Unlike the VRS scheme, in the present case we are concerned with a clause in a commercial contract which is a bilateral document mutually agreed upon, and hence this principle can have no application. Therefore, clause 9.3 will have to be read as incorporated only with a view to provide for contractor's acceptance of the tax liability arising out of his obligations under the contract." 18. On the above discussions this Court does not find any error both on facts or law that at the time of exercising an option the rate of tax under the said beneficial scheme was 4% and therefore the petitioner cannot continue to deposit the rates under the said beneficial scheme at the rate of 2%. It admits no ambiguity to say that the rate prevalent at the time of exercising an option would continue until the expiration of the work's contract and any variation and/or changes in the rate of tax by subsequent notification the department would not be within its authority to charge more as such changes would not be applicable to the existing work's contract. 19. With these observations, the Writ Petition is thus disposed of. 20. However, there shall be no order as to costs. Urgent photostat certified copy of the judgment, if applied for, be given to the parties on priority basis. Petition disposed of.