2012 (11) TMI 684 - AT - Service Tax

Demand of service tax under the category of Business Auxiliary Service - whereas the confirmation of demand and imposition of penalty has been done by treating the services rendered as Cargo Handling Service order of authorities beyond the show cause notice order set aside

Summary

Issues involved:
- Discrepancy between show cause notice and confirmation of demand by adjudicating authority
- Applicability of service tax on services provided
- Imposition of penalty under Section 78

Analysis:

Issue 1: Discrepancy between show cause notice and confirmation of demand by adjudicating authority
The appellants entered into an agreement for providing services, and a proposal was made to treat the services as 'Business Auxiliary Services'. However, the original adjudicating authority confirmed the demand under the category of 'Cargo Handling Service', which was beyond the scope of the show cause notice. The counsel for the appellant argued that this discrepancy alone should warrant allowing the appeal, citing various decisions to support this position.

Issue 2: Applicability of service tax on services provided
The show cause notice proposed a demand for service tax on all services as 'Business Auxiliary Services', but the confirmation of demand was based on treating the services as 'Cargo Handling Service'. The Tribunal found that the authorities had exceeded the scope of the show cause notice, similar to a precedent decision cited in Joginder Pal v. Commissioner of Central Excise, Gurgaon. The Tribunal agreed with the appellant's counsel that the authorities had gone beyond the notice, leading to the decision to set aside the impugned order and allow the appeal.

Issue 3: Imposition of penalty under Section 78
In addition to confirming the demand for service tax, a penalty equal to the service tax under Section 78 was imposed by the original adjudicating authority. However, due to the discrepancy between the show cause notice and the actual services considered for taxation, the Tribunal set aside the impugned order, which also led to the disposal of the stay petition.

This judgment highlights the importance of aligning the scope of the show cause notice with the actual services considered for taxation, emphasizing the principle of natural justice and fair proceedings in tax matters. The decision serves as a reminder for adjudicating authorities to adhere strictly to the allegations made in the show cause notice to ensure a fair and just determination of tax liabilities.