2012 (9) TMI 101 - AT - Service Tax

Demand of service tax and penalty rent-a-cab operator Held that - Appellant was issued a show cause notice without even giving him an opportunity to explain the situation - appellant had taken registration in May 2004 and the fact that it did not own any vehicle in 2004-2005, there is a possibility that he could have entertained a bona fide belief about the liability of service tax - no evidence was produced before original adjudicating authority and Commissioner (Appeals) did not allow them to produce any evidence - matter remanded to original adjudicating authority with direction to give a reasonable opportunity to the appellant to produce the evidence

Summary

Issues:
Service tax demand for Business Auxiliary Service rendered during 2003-2004, rejection of appeal based on Rule 5 of Central Excise (Appeals) Rules, 2001, non-submission of evidence before original adjudicating authority, application of Rule 23 of Customs, Excise and Service Tax Appellate Procedure Rules, 1982, suppression of facts with intent to evade service tax, liability to penalty under Section 78 of Finance Act, 1994, remand to original adjudicating authority for fresh evidence production.

Analysis:

1. The case involves a service tax demand of Rs. 62,063 for Business Auxiliary Service provided during 2003-2004, with penalties imposed under Sections 77 and 78 due to alleged suppression of facts. The appellant contested the rejection of the appeal by the Commissioner (Appeals) based on Rule 5 of Central Excise (Appeals) Rules, 2001, which restricts the admission of additional evidence not presented before the original adjudicating authority.

2. The appellant argued that since no evidence, either oral or documentary, was submitted before the original adjudicating authority, Rule 5 should not apply. The appellant claimed a lack of vehicles in possession during the relevant period, leading to a genuine belief of non-liability for service tax. The appellant requested a remand to the original adjudicating authority to present evidence and seek justice.

3. The respondent contended that the appellant failed to reply to show cause notices, ignored opportunities for hearings, and did not defend the case adequately. The respondent supported the rejection of the appeal and argued that the submissions made before the Commissioner (Appeals) constituted additional evidence, necessitating rejection under Rule 5.

4. The Tribunal considered the arguments and noted the absence of a decision on merit by either authority. Instead of focusing on pre-deposit or stay, the Tribunal opted for a final decision. The Tribunal examined Rule 5 and emphasized the need for evidence to be produced before the lower authority unless specific exceptions apply.

5. The Tribunal acknowledged the complexities of the case and the need for a detailed consideration. It referenced Rule 23 of Customs, Excise and Service Tax Appellate Procedure Rules, 1982, which allows the Tribunal to permit additional evidence for the interest of justice, even if not presented before the lower authority.

6. Considering the circumstances, including the appellant's registration in 2004, lack of vehicles, and the possibility of a genuine belief regarding service tax liability, the Tribunal remanded the matter to the original adjudicating authority. The appellant was granted an opportunity to present fresh evidence, oral or documentary, to ensure a fair decision without expressing any opinion on the case's merits.

7. The Tribunal's decision to remand the case for fresh evidence production addressed the concerns raised by both parties, ensuring a just and thorough examination of the matter under the applicable rules and provisions.

Conclusion:
The Tribunal's ruling to remand the case for the appellant to present additional evidence before the original adjudicating authority aligns with the principles of fairness and due process, allowing for a more comprehensive consideration of the service tax liability issue without prejudging the outcome.