2015 (9) TMI 1279 - AT - Service Tax

Appeal granted emphasizing importance of clear notice, right to defend, specificity in tax evasion allegations

Ajay Marketing Co. Versus C.C.E., Panchkula

The Tribunal allowed the appeal, emphasizing the importance of a well-defined show cause notice and the right of the assessee to defend themselves ... Business Auxiliary Services - intention to evade service tax - Held that:- In the show cause, neither any period has been specified nor any amount of demand quantified. The show cause notice does not refer to any agreement between the appellant and the telephone company so as to identify the exact nature of service rendered. It also does not name the taxable services allegedly rendered by the appellant. These deficiencies in a show cause notice are fatal and such a show cause notice is per se unsustainable as it disables the assessee to defend itself, thereby being violative of the principles of natural justice. Further from whatever can be made out from the show cause notice, the issue is fully covered in favour of the appellant vide CESTAT/High Court orders in the cases of R.B. Agencies vs. C.C.E., Calicut - [2007 (7) TMI 200 - CESTAT, BANGALORE] and Martend Foods and Dehydrates - [2013 (6) TMI 339 - CESTAT NEW DELHI ] and Commissioner vs. Daya Shankar Kailash Chand - [2015 (8) TMI 1007 - ALLAHABAD HIGH COURT]. - Impugned order is set aside - Decided in favour of assessee. Issues:- Appeal against Order-in-Revision dated 25.2.2009- Annulling Order-in-Original No.04/AC/ST/YNR/2007- Imposition of penalty under Section 75A, Section 76 & Section 78- Allegation of non-payment of service tax on various services- Discrepancy in the show cause notice and lack of specificsAnalysis:1. Appeal against Order-in-Revision dated 25.2.2009:The appeal was filed challenging the Order-in-Revision dated 25.2.2009, annulling the Order-in-Original No.04/AC/ST/YNR/2007. The appellant was accused of deliberately suppressing the fact of providing Business Auxiliary Services to evade service tax.2. Imposition of penalty under Section 75A, Section 76 & Section 78:The order invoked the extended period under the proviso to Section 73 of the Finance Act, 1994, for unpaid service tax on Business Auxiliary Services. It held M/s Ajay Marketing Co. liable for penalty under Section 75A, Section 76 & Section 78, equal to the unpaid service tax amount.3. Allegation of non-payment of service tax on various services:The show cause notice alleged non-payment of service tax by the appellant for services provided as a Direct Selling Agent/Direct Marketing Agent for a mobile company. The notice demanded unpaid service tax, interest, and penalties under relevant sections of the Finance Act, 1994.4. Annulling Order-in-Original No.04/AC/ST/YNR/2007:The primary adjudicating authority annulled the Order-in-Original based on the agreement between the appellant and the telecom company, stating that no taxable services were provided. However, the Revisionary Authority disagreed, holding that the appellant was indeed providing Business Auxiliary Services.5. Discrepancy in the show cause notice and lack of specifics:During the hearing, it was noted that the show cause notice lacked specifics such as the period and the amount of demand. The notice did not refer to any agreement between the parties to identify the services rendered, making it unsustainable and violative of natural justice principles. Citing precedents, the Tribunal found in favor of the appellant, setting aside the impugned order.In conclusion, the Tribunal allowed the appeal, emphasizing the importance of a well-defined show cause notice and the right of the assessee to defend themselves adequately. The decision highlighted the need for specificity and clarity in allegations of tax evasion to ensure fairness and adherence to legal principles.