2018 (5) TMI 316 - AT - Service Tax

Tribunal sets aside order citing natural justice violations, remands case for fair decision

Mane And Co. Versus Commissioner of Central Excise, Customs And Service Tax Kolhapur

The Tribunal allowed the appeal, setting aside the impugned order due to violations of natural justice and improper valuation of services. The case was ... Principles of natural justice - the appellant was supplying tangible goods, namely, bulldozers to various persons but not paying service tax on the amounts received - Held that: - it is evident that the principles of natural justice was not followed as the valuation of the service was taken on hypothetical basis and not attributed to the actual service - the appellant’s request for further submission was also not considered - the matter needs to be remanded - appeal allowed by way of remand. Issues:1. Violation of principles of natural justice in the adjudication process.2. Lack of proper valuation of services provided.3. Allegation of demand made without proper basis.4. Invocation of extended period for show cause notice.Issue 1: Violation of principles of natural justiceThe appellant contended that the adjudicating authority did not follow the principles of natural justice as a proper hearing was not conducted. The appellant argued that despite submitting detailed explanations, the order was passed without due consideration. The appellant highlighted that the valuation of services was done hypothetically without factual basis. The appellant emphasized that the department failed to identify the appellant's activities correctly, leading to a violation of natural justice. The appellant also raised concerns about the issuance of a second show cause notice invoking the extended period, which was deemed time-barred based on the precedent set by the Supreme Court in Nizam Sugar Factory v. Commissioner of Central Excise.Issue 2: Lack of proper valuation of services providedThe Tribunal observed that the valuation of services in the case was conducted on a hypothetical basis without attributing it to the actual services provided. It was noted that the appellant's request for further submission was not considered, indicating a lack of proper valuation methodology. Due to these discrepancies, the Tribunal concluded that the matter required a remand for a fresh adjudication to ensure a reasoned decision based on accurate valuation of the services provided.Conclusion:After careful consideration of the submissions from both parties, the Tribunal found merit in the appellant's argument regarding the violation of natural justice and the lack of proper valuation of services. Consequently, the impugned order was set aside, and the matter was remanded to the adjudicating authority for a fresh decision. The Tribunal allowed the appeal by remanding the case to ensure that the appellant is given proper opportunities to present their case and address all issues in a fair and reasoned manner.