Service tax demand fails without statutory notice, and a disputed legal position is not a rectifiable apparent error.

Service tax demand under Section 68(1) of the Finance Act was held unsustainable where the statutory notice contemplated under Section 73 had not been issued. The Tribunal accepted the assessee's objection that, on the facts presented, the demand could not be maintained in the absence of the required notice and found no infirmity in the impugned order. It also held that the alleged legal error did not amount to a mistake apparent on the face of the record, so rectification was not warranted. The demand was therefore set aside and the rectification application rejected.

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Issues: Whether the demand of service tax under Section 68(1) of the Finance Act was sustainable in the absence of a notice under Section 73 of the Finance Act, and whether any mistake apparent on record warranted rectification.

Analysis: The rectification application proceeded on the premise that the earlier order contained an apparent error regarding the settled state of law and that the demand case was distinguishable because the earlier Supreme Court decision dealt with Section 73. The order records the assessee's objection that, where no notice under Section 73 had been issued, a demand under Section 68 could not be sustained. Accepting that position, the Tribunal found no infirmity in the impugned order and held that the demand was not maintainable on the facts presented. Since the alleged error did not disclose any mistake apparent on the face of the record, rectification was not justified.

Conclusion: The demand was set aside and the rectification application was rejected, in favour of the assessee.

Ratio Decidendi: A demand of service tax cannot be sustained where the statutory notice contemplated for its levy is absent, and such a contested legal position does not constitute a mistake apparent on the record for rectification.

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