Show-cause notice and exemption verification govern service tax demands; one demand set aside, others remanded for fresh examination.

Service tax demands for different periods turned on verification of the assessee's claims of excess deposit and Cenvat credit reversal, and on exclusion of study material value under Notification No. 12/2003-ST. Where the adjudication order contained no specific finding on these factual claims, the matters were remitted for fresh verification and re-adjudication. For the 2010-11 demand, the absence of a show-cause notice meant the assessee was not validly put to notice of the charge, so that demand was unsustainable and set aside. The matter was thus partly allowed, with one demand annulled and the balance sent back for lawful reconsideration.

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Issues: (i) Whether the service tax demand of Rs. 2,62,84,245/- for the period 2003-04 to 2007-08 required verification in light of the appellant's claim of deposit and Cenvat credit reversal. (ii) Whether the demand of Rs. 1,07,53,337/- for 2009-10 was liable to be verified on the appellant's claim of exclusion of study material value under Notification No. 12/2003-ST dated 20.6.2003. (iii) Whether the demand of Rs. 2,23,16,485/- for 2010-11 could survive when no show-cause notice had been issued to the appellant for that period.

Issue (i): Whether the service tax demand of Rs. 2,62,84,245/- for the period 2003-04 to 2007-08 required verification in light of the appellant's claim of deposit and Cenvat credit reversal.

Analysis: The material on record indicated that the appellant claimed having made deposits and reversed Cenvat credit in excess of the demand reflected in the show-cause notice. Since the adjudication order did not contain a specific finding on this aspect, the correctness of the demand required factual verification.

Conclusion: The demand was remitted to the adjudicating authority for verification.

Issue (ii): Whether the demand of Rs. 1,07,53,337/- for 2009-10 was liable to be verified on the appellant's claim of exclusion of study material value under Notification No. 12/2003-ST dated 20.6.2003.

Analysis: The appellant claimed that separate bills had been issued for study material and that the value thereof was excludible from the taxable value. As the adjudication order did not record a clear finding on compliance with the notification conditions, the claim needed examination on evidence.

Conclusion: The demand was remitted to the adjudicating authority for verification of eligibility under the notification.

Issue (iii): Whether the demand of Rs. 2,23,16,485/- for 2010-11 could survive when no show-cause notice had been issued to the appellant for that period.

Analysis: A show-cause notice is the foundation of adjudication and a demand cannot be sustained against a person who was not put to notice of the charge. In the absence of a show-cause notice to the appellant for the relevant period, the adjudication was vitiated and the demand could not stand.

Conclusion: The demand for 2010-11 was held unsustainable.

Final Conclusion: The matter was partly allowed, with one demand set aside and the remaining demands sent back for fresh verification and re-adjudication in accordance with law.

Ratio Decidendi: A demand in adjudication cannot be sustained unless the assessee is put to notice through a valid show-cause notice, and where factual findings on exemption or credit adjustment are absent, remand for verification is warranted.

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