Show-cause notice scope limits service tax demands; a new ground beyond the notice cannot sustain recovery.

Differential service tax on Goods Transport Agency services could not be sustained where the adjudicating authority departed from the basis set out in the show-cause notice and relied instead on a different ground under the proviso to Notification No. 32/2004. The document states that an assessee must be called upon to meet the case made in the notice, and a demand cannot travel beyond its scope. On that basis, the demand founded on the new ground was held not sustainable, and recovery was stayed in favour of the assessee.

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Issues: Whether the demand of differential service tax could be sustained when it was raised on a ground not covered by the show-cause notice.

Analysis: The appellants had claimed abatement under Notification No. 32/2004 in relation to Goods Transport Agency service. The adjudicating authority had not rested the demand on the same basis as the show-cause notice, but had introduced a different ground by holding that the condition in the proviso to the notification was not satisfied. A demand cannot be sustained on a ground that travels beyond the scope of the notice under which the assessee was called upon to meet the case.

Conclusion: The demand, to the extent founded on a ground beyond the show-cause notice, was not sustainable and stay of recovery was warranted in favour of the assessee.

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