2010 (12) TMI 764 - AT - Service Tax

Rejection of Refund Claim - Non compliance of provisions of Export of Services Rules 2005 - Simultaneous proceedings - Demand raised u/s 73 by way of issuing SCN and Commissioner issued SCN to revise the order in exercise of power under Section 84 - Held that - a new case cannot be made out against the assessee in revisionary proceedings as these revisionary proceedings were in place of an appellate proceedings which were absent in the provisions of the Finance Act 1994 during the relevant period. Suffice to say that subsequently the provisions of Section 84 were deleted and appellate proceedings were introduced. Hence reading of the current provisions and old provisions would indicate that the learned Commissioner as a revisionary authority could have only passed an order within the framework of the show cause notice which has been initially issued and adjudicated by the Adjudicating Authority and could not have made a new case. - Revisionary order passed by commissioner set aside - Decided in favor of assessee.

Issues Involved:
1. Legality of the review show cause notice issued by the Commissioner under Section 84 of the Finance Act, 1994.
2. Validity of the refund claim initially sanctioned by the Adjudicating Authority.
3. Whether the Commissioner can introduce new grounds in the review show cause notice that were not part of the original show cause notice.

Detailed Analysis:

1. Legality of the Review Show Cause Notice Issued by the Commissioner:
The appellant contended that the Commissioner should not have issued the review show cause notice under Section 84(1) of the Finance Act, 1994, as there was already a pending show cause notice for the recovery of the erroneous refund. The appellant argued that the Commissioner exceeded his authority by introducing new grounds not mentioned in the original show cause notice. The Tribunal analyzed Section 84 of the Finance Act, 1994, which allows the Commissioner to review orders passed by subordinates but emphasized that such review must stay within the parameters of the original proceedings. The Tribunal found that the Commissioner's review show cause notice included new allegations about non-compliance with the Export of Services Rules, 2005, which were not part of the original show cause notice. This was deemed beyond the scope of the Commissioner's powers under Section 84.

2. Validity of the Refund Claim Initially Sanctioned by the Adjudicating Authority:
The Adjudicating Authority had originally sanctioned the refund claim filed by the appellant, accepting that the services provided amounted to an export of services and were thus exempt from service tax. The Commissioner, in his review, contested this decision, claiming that the appellant did not comply with the conditions prescribed under the Export of Services Rules, 2005. The Tribunal noted that the original show cause notice did not question the compliance with these rules, and the Adjudicating Authority had found the appellant's submissions satisfactory. Thus, the Tribunal held that the Commissioner's review could not introduce new grounds and must be confined to the issues raised in the original show cause notice.

3. Whether the Commissioner Can Introduce New Grounds in the Review Show Cause Notice:
The Tribunal reiterated that a new case cannot be made out in revisionary proceedings, which are meant to serve as a substitute for appellate proceedings. The Commissioner's review show cause notice introduced new allegations about the non-compliance with the Export of Services Rules, 2005, which were not part of the original show cause notice. The Tribunal referenced the decision in Sands Hotel Pvt. Ltd. v. CST, Mumbai, where it was held that the review show cause notice cannot go beyond the original show cause notice. The Tribunal concluded that the Commissioner's actions were beyond his authority, as he introduced new grounds not previously mentioned.

Conclusion:
The Tribunal set aside the impugned order in review passed by the Commissioner, finding it incorrect and beyond the scope of the original show cause notice. The appeal was allowed, and the Tribunal did not record findings on the various submissions made by both sides, as the decision was based on the question of law regarding the Commissioner's authority under Section 84 of the Finance Act, 1994. The Tribunal emphasized that the Commissioner's review powers must be exercised within the framework of the original proceedings and cannot introduce new grounds or allegations.

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