Service tax demand under manpower recruitment and supply services failed where the show cause notice lacked a clear factual foundation.

A service tax demand under manpower recruitment and supply services was held unsustainable because the show cause notice did not clearly set out the factual or contractual basis of the charge. The notice referred only to the statutory provisions and failed to disclose any actual supply of manpower or recruitment-and-supply contract, leaving the assessee without a clear basis to meet the allegation. As a result, the proceedings were found not sustainable and the Revenue's appeal failed.

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Issues: Whether the service tax demand under the category of manpower recruitment and supply services could be sustained when the show cause notice did not clearly disclose the factual basis or contractual foundation for the charge.

Analysis: The show cause notice was examined as the foundational document for the proceedings. It did not bring out any supply of manpower or any element of a contract for recruitment and supply of manpower. The notice merely discussed the provisions of the Finance Act, 1994 without laying a clear factual foundation for the proposed levy. A charge in tax proceedings must be stated with sufficient clarity so that the assessee knows the basis and gravity of the allegation.

Conclusion: The proceeding was not sustainable, and the Revenue's appeal failed.

Final Conclusion: The demand was held unsustainable for want of a proper show cause notice foundation, resulting in dismissal of the Revenue's appeal.

Ratio Decidendi: A tax demand cannot be sustained unless the show cause notice clearly sets out the factual and contractual basis of the charge.

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