2011 (5) TMI 809 - AT - Service Tax

Cleaning activity and maintenance and repair activity SCN - Neither the show cause notice has made any attempt to lay foundation of proceedings in clear terms in respect of each activity nor the authorities below made effort to find out the substance of allegation therein - Neither they spelt on incidence of tax on each activity differently nor tested the activities under touch stone of law because the show cause notice itself was ill founded, appellants appeal allowed

Summary

Issues:
Levy of service tax on various services based on show cause notice dated 26-6-2006. Interpretation of the term Cleaning activity and maintenance and repair activity. Examination of different services provided and consideration received for each activity. Proper foundation of proceedings and incidence of tax on each activity.

Analysis:
The appellant appealed against the confirmation of service tax levy on various services as per the show cause notice. The appellate authority interpreted the terms "Cleaning activity" and "maintenance and repair activity" but failed to consider the breakdown of different services provided in the correct perspective. The show cause notice did not clearly indicate the consideration received for different activities, leading to a lack of clarity in bringing them under the purview of the law.

The appellant's counsel highlighted specific job orders and invoices related to various activities like gardening, miscellaneous jobs in a PVC plant, welfare activities, and other plant-related work. The authorities should have thoroughly examined each activity to properly establish the tax liability under different taxable entries. The lack of a clear foundation in the show cause notice and the failure of the authorities to analyze each activity in detail resulted in confusion regarding the tax incidence on different activities. The composite show cause notice issued was insufficient, and the authorities did not provide a well-reasoned order, leading to the appellate tribunal allowing the appeal due to the lack of clarity and proper examination of each activity under the law.

As the appeal was allowed in favor of the appellant, the counsel requested consequential relief. The tribunal agreed to grant such relief in accordance with the law, subject to verification of the records. The judgment highlighted the importance of a clear foundation in show cause notices and the necessity for authorities to thoroughly examine each activity to determine the tax liability accurately. The lack of proper analysis and reasoning by the authorities below led to the tribunal allowing the appeal.