2017 (9) TMI 455 - AT - Service Tax

Tribunal overturns vague tax demand due to lack of details in notice, grants appellant relief

The Tribunal set aside the Order-in-Original demanding service tax due to the vagueness and lack of detailed accusations and demand breakup in the show ... Vague show cause notice - lack of breakup of demand - gist of accusation - service tax demand - self contradictory show cause notice - setting aside adjudication order - consequential benefitsVague show cause notice - lack of breakup of demand - self contradictory show cause notice - Validity of the show cause notice and the consequent adjudication confirming service tax demand and penalties - HELD THAT: - The Tribunal found the show cause notice to be vague and unsustainable because it did not furnish a clear breakup of the demand under the different heads of service alleged. The SCN was self contradictory: paragraph 5 contained a detailed, work wise breakup of the appellant's activities, whereas later parts of the SCN alleged that the appellant had failed to produce required particulars and therefore demand was based on gross receipts. There was no finding or allegation of disobedience to summons or failure to furnish information in response to departmental notices. The adjudicating authority also failed to deal with the breakup submitted by the appellant in reply. For these reasons the Tribunal held that the SCN lacked the necessary gist of accusations and clarity required for adjudication and was therefore bad in law, warranting setting aside of the Order in Original which confirmed the demand and penalties. The appellant was allowed consequential relief in accordance with law and other grounds were left open for consideration as appropriate.Show cause notice held to be vague and self contradictory; Order in Original setting aside and appeal allowed with consequential benefits.Final Conclusion: The impugned adjudication confirming the service tax demand and penalties is set aside because the show cause notice was vague, lacked a breakup of the demand and was self contradictory; appeal allowed and consequential benefits granted, other grounds left open. Issues:Challenge to Order-in-Original demanding service tax, classification of services provided, lack of detailed breakup in show cause notice, sustainability of impugned order.Analysis:The appellant challenged the Order-in-Original demanding service tax of Rs. 3,61,00,224/- passed by the Commissioner of Central Excise & Service Tax, Noida. The appellant was engaged in services like Site Formation and Clearance, excavation, earthmoving, demolition, and Supply of Goods without being registered for service tax. A search revealed the nature of services provided, including earth excavation, soil supply, and supply of JCB Machines and Dumpers. The appellant's proprietor admitted to the activities and agreed to pay the service tax. The demand was based on the gross turnover without a detailed breakup for each financial year.The appellant contended that the impugned order lacked specificity in the demand breakup, making it unsustainable. The Counsel cited a precedent where a similar vague show cause notice was quashed. The appellant had provided a detailed turnover breakup in response to the show cause notice, but the Commissioner failed to consider it. The revenue department did not allege non-cooperation from the appellant in providing information. The Tribunal found the show cause notice to be vague and contradictory, lacking essential details and breakup of the demand, leading to the order being set aside.After considering the arguments, the Tribunal concluded that the show cause notice was unsustainable due to its vagueness and lack of detailed accusations and demand breakup. The notice was self-contradictory, providing detailed services breakdown in one section but alleging lack of proper details in another. As there was no evidence of non-cooperation from the appellant, the Tribunal set aside the impugned order, granting the appellant consequential benefits. Other grounds of appeal were left open for future consideration.