2006 (11) TMI 24 - AT - Service Tax

Tribunal sets aside communication on Service Tax liability, highlighting natural justice principles.

TNT INDIA PRIVATE LTD Versus COMMISSIONER OF SERVICE TAX, BANGALORE

The Tribunal held that the communication directing the appellant to discharge Service Tax liability on International Freight was an appealable order ... Demand(Service tax)-Courier agency-International freight services-As per the decision of additional commissioner it held non-taxable which is against the commissioner decision-Order of commissioner regarded bad in law and set aside. Issues:1. Appeal against order of Commissioner of Service Tax regarding applicability of Service Tax on International Freight service.Analysis:The appellant, engaged in International Courier and International Freight business, sought clarification on the applicability of Service Tax on International Freight. The Commissioner, through an Additional Commissioner, clarified in a letter that International Freight did not fall under the purview of Service Tax. The appellant relied on this clarification and did not charge or collect Service Tax on International Freight. However, a subsequent communication nullified the earlier clarification, directing the appellant to discharge Service Tax liability. The appellant challenged this communication before the Appellate Tribunal.The appellant argued that the communication was an appealable order under Section 86 of the Finance Act, 1994. They contended that the order was issued without following due process, violating principles of natural justice. The appellant cited legal definitions of 'order' and precedent cases to support their position that the impugned communication was indeed an order altering their rights and liabilities. They emphasized the need for a Show Cause Notice and an opportunity to be heard before reversing the earlier decision.On the other hand, the Revenue argued that the communication was not an order passed by the Commissioner as an Adjudicating Authority, hence not appealable under Section 86. However, the Tribunal disagreed, stating that the communication clearly determined the rights of the appellant regarding Service Tax liability on International Freight.After reviewing the case records, the Tribunal found that the communication nullifying the earlier clarification was indeed an order altering the appellant's rights and liabilities. The Tribunal held that the communication, issued without following principles of natural justice, was invalid. Emphasizing the importance of due process, the Tribunal set aside the impugned communication and allowed the appeal with any consequential relief.In conclusion, the Tribunal found that the communication directing the appellant to discharge Service Tax liability on International Freight was an appealable order issued without following due process. The Tribunal emphasized the necessity of adhering to principles of natural justice in such matters and set aside the communication, providing relief to the appellant.