Adjudication

[MANASH MUKHERJEE]

Dear Sir,

A show cause notice was issued to an assessee on the ground that they have violated the provisions of Sec.68,69,70 of FA,1994. Demand was issued on that ground. Subsequently the case adjudicated and demand confirmed underSection 73 and penalty imposed under 78 of the said act.My question is that how can a demand be confirmed on the sections which have not been mentioned in the SCN.

[Rajagopalan Ranganathan]

Sir,

If the order of the Adjudicating Authority indicates the sections of Finance Act,1994 under which the demand is sustained and the section under which the consequential penalties are imposed then that it will meet the requirement of the law of giving notice to the assessee regarding such demand and imposition. From you narration I presume that the show cause notice does not indicate the section under which the demand cannot be against you and the section under which penalty cannot be imposed. But in my experience as Departmental Officer and a consultant the Appellate Authorities will not treat this a fatal to adjudicate the show cause notice. Since the relevant sections had been indicated in the order you will have an opportunity to defend you before the Appellate Authorities. Since you will pursue the matter in appeal, in my opinion you are put to any disadvantage

[Ramanujam Varadarajan]

Sec.68,69, and 70 refers about the statutory compliance requirements under the law. Sec.73 refers about the time limit within which the demand can be raised on deficiencies result in non-payment of service tax (normal period or extended period). Thus, both are indepedent.

However SCN would require to specify the basis of adopting provision of Sec.73 (normal period/extended period) as well as proposal to levy penalty. Further, if the levy is about non-payment of service tax, it should also specify the category of service under which service tax is proposed. If there is lack of clarity in the SCN in proposing the liability, it can be questioned before legal forum.

[DR.MARIAPPAN GOVINDARAJAN]

Dear Sir,

In some cases the Tribunal took the view if the contravention of the provisions is elaborately indicated without indicating the concerned section, there is no flaw in it. If the same is not indicated in the show cause notice issued to you, then you can challenge the same before the appellate authority as advised by my learned professional colleagues.

AI Summary

Notice specificity: omission of statutory sections may be cured if adjudicating order specifies the applicable provisions and penalties. Where an adjudicating order explicitly identifies the provisions sustaining a demand and those authorising penalties, that identification can cure a defect in a show cause notice lacking citation of specific statutory sections; nonetheless, a proper notice should specify the basis for invoking limitation rules, the proposal to levy penalties, and the service category alleged to attract tax, since ambiguity on these points may be challenged for want of particularity.