Service tax adjudication set aside for denial of effective participation; matter remitted to reply stage with all contentions open.

An ex parte service tax Order-in-Original based on income-tax return disclosures and departmental inputs was set aside because the petitioner was denied effective participation in the adjudication. The matter was remitted to the stage of reply to the show-cause notice, with liberty to file a fresh response and all contentions kept open. The court noted that similar connected disputes had already been sent back for reconsideration, including examination of the scope of Section 65B(44) of the Finance Act, 1994, the negative list, exemption under Notification No. 25/2012-ST, reverse charge liability, and limitation.

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Issues: Whether the Order-in-Original raising service tax demand based on income-tax return disclosures and departmental inputs should be set aside and the matter remitted to the stage of reply to the show-cause notice.

Analysis: The petitioner was denied effective participation in the adjudication and sought an opportunity to meet the show-cause notice on merits. The Court noted the earlier order in connected matters, where similar disputes had been relegated for reconsideration with specific observations for the to examine, including the applicability of Section 65B(44) of the Finance Act, 1994, the negative list, exemption under Notification No. 25/2012-ST dated 28.06.2012, liability under the applicable reverse charge framework, and limitation. The order under challenge was an ex parte Order-in-Original, and the Court found it appropriate to follow the same course adopted in the connected matters.

Conclusion: The Order-in-Original was set aside and the matter was remitted to the stage of reply to the show-cause notice, with liberty to the petitioner to file a fresh reply and all contentions kept open.

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