2015 (9) TMI 1470 - AT - Service Tax

Demand alongwith interest and penalty - appellant providing comprehensive on train services in specified trains, including catering, supply of bed rolls, supply of cleaning staff for cleaning coaches and persons for miscellaneous works including supervising staff for ensuring effective rendition of the agreed services - period involved is May, 2006 to March, 2008 - classification of service done different which was not alleged in the show cause notice - Held that - the principle is well settled that a classification of taxable service which is not alleged in the show cause notice cannot be concluded to support levy of tax. The determination of classification of services provided by the appellant to IRCTC is not an academic exercise. The lower appellate authority was discharging an appellate jurisdiction. Due discharge of such jurisdiction warrants recording a finding as to classification only on the basis of what was alleged in the show cause notice. Therefore, the impugned order is unsustainable and is accordingly quashed. - Decided in favour of appellant

Summary

Issues:
Classification of services for taxation under the Finance Act, 1994 based on the show cause notice allegations.

Analysis:
The appellant, engaged in providing on-train services to Indian Railway Catering and Tourism Corporation Ltd. (IRCTC) from May 2006 to March 2008, was alleged to have provided support services of business and commerce under Section 65(105)(zzzq) of the Finance Act, 1994. The primary adjudication order confirmed this classification and imposed a service tax demand of &8377; 38,99,084/- along with interest and penalties. The appellant's appeal against this order was rejected by the impugned order, which concluded that the service provided did not fall within the ambit of support service for business or commerce. However, the lower appellate authority proceeded to classify the service under business auxiliary service, which was not alleged in the show cause notice. The appellate tribunal emphasized that the classification of taxable service not mentioned in the show cause notice cannot support the levy of tax, as the lower appellate authority should have based its decision solely on the allegations in the notice.

The tribunal held that the lower appellate authority's failure to restrict its classification to what was alleged in the show cause notice rendered the impugned order unsustainable. It emphasized that the determination of the classification of services provided by the appellant should have been based solely on the content of the notice. The tribunal quashed the impugned order, allowing the appeal without costs. The judgment highlights the importance of adhering to the allegations in the show cause notice when determining the classification of services for taxation under the Finance Act, 1994.