2015 (9) TMI 882 - AT - Service Tax

Appellate Tribunal overturns order due to vague show-cause notices lacking specificity.

The Appellate Tribunal CESTAT Mumbai set aside the impugned order due to the lack of specificity in the show-cause notices issued by the revenue, which ... CENVAT Credit - Banking and Financial Services and Business Auxiliary Services - Held that:- Whole proceedings are vitiated for want of proper show-cause notice. I find that the show-cause notice is vague as it does not give the break up of the amount under each head of input service proposed to be disallowed. Further, although the show-cause notice refers to the audit report and the assessee's reply to it, nowhere in the show-cause notice, neither the allegation of the audit has been discussed nor the reply of the appellant thereto and as to why the amount under the particular head is proposed to be disallowed. Also, no reason as to why the said services, are not input service, flows from the show-cause notice. Hence, I hold that the show-cause notices are vague, thereby vitiating the impugned order. Thus the impugned order is set aside. - Decided in favour of assessee. Issues: Lack of proper show-cause notice leading to the vitiating of proceedings.In this judgment by the Appellate Tribunal CESTAT Mumbai, the appellant, a consultancy service provider, availed CENVAT credit on various input services. The revenue issued show-cause notices proposing to disallow the credit, alleging a lack of nexus between the input services and the output service of the appellant. However, the notices failed to provide a detailed breakdown of the amounts attributable to each service. The show-cause notice only mentioned a total amount to be disallowed without specifying the basis for denial. The tribunal observed that the lack of specificity in the notice rendered the proceedings flawed. The tribunal noted that the notice did not discuss the allegations from the audit report or the appellant's response, nor did it provide reasons for disallowing specific services as input services. Consequently, the tribunal held that the vague show-cause notices tainted the entire process, leading to the setting aside of the impugned order. As a result, the appeals were allowed in favor of the appellant with any consequential benefits.