Ex parte service-tax adjudication set aside and remanded for fresh reply, exemption scrutiny, and reconsideration of liability.

The ex parte service-tax adjudication and consequential recovery proceedings were set aside because the assessee was not afforded an effective opportunity to reply to the show-cause notice. The matter was restored to the pre-adjudication stage for fresh consideration, with liberty to file a fresh reply. The authority was directed to reconsider the dispute in light of the earlier remand directions, including whether the activity falls within section 65B(44) of the Finance Act, 1994, whether it is covered by the negative list, whether exemption under Notification No. 25/2012-ST or any other applicable notification applies, and whether liability arises under the reverse-charge framework.

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Issues: Whether the order-in-original and consequential recovery proceedings relating to service tax were liable to be set aside and the matter remitted to the stage of reply to the show-cause notice, with the authority to reconsider the dispute in the light of the earlier remand directions and applicable exemption provisions.

Analysis: The impugned adjudication was passed ex parte and proceeded on the basis of information reflected in income-tax returns and TDS certificates. The Court noted that in connected matters involving similar service-tax disputes, matters had already been remitted for reconsideration, with specific guidance to examine inter alia whether the activity falls within the scope of Section 65B(44) of the Finance Act, 1994, whether it is covered by the negative list, whether an exemption under Notification No. 25/2012-ST dated 28.06.2012 or any other applicable notification is available, and whether liability arises under the relevant reverse-charge framework. In view of those earlier directions and the fact that the petitioner sought an to place a reply to the notice, the Court found it appropriate to restore the matter to the pre-adjudication stage.

Conclusion: The order-in-original and the consequential recovery action were set aside, the matter was remitted to the stage of reply to the show-cause notice, and the petitioner was permitted to file a fresh reply before the authority.

Final Conclusion: The dispute was reopened for fresh consideration by the departmental authority, with all contentions kept open and the recovery consequences neutralised pending reconsideration.

Ratio Decidendi: Where a service-tax adjudication is passed ex parte and the assessee is not afforded an effective opportunity to answer the notice, the order and consequential recovery action may be set aside and the matter remitted for reconsideration in accordance with applicable exemption and charging provisions.

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