2013 (7) TMI 742 - AT - Service Tax

Validity of show cause notice assessee was engaged in the activity of Consulting Engineer s Service to M/s Ispat Industries Ltd. during the period 1999-2000 Held that - There is no valid show cause notice against the appellant towards any service tax demand - the entire proceedings are vitiated and consequently the order passed against the appellant is not sustainable in law - there is no demand from the appellant towards any service tax liability - Without issue of a notice, no order can be passed against the appellant - in the show cause notice, the demand for service tax has been made against assessee as the recipient of the services - there is no mention of the appellant anywhere in the body of the show cause notice and only at the beginning, the appellant s name figures appellant was not heard and personal hearing was granted only to the recipient of the service - demands were dropped - appellant had rendered services in relation to installation, commissioning and erection. Erection, Installation and Commissioning Service came into the tax net only w.e.f July, 2003 whereas the impugned demand pertains to the period 1999-2000 appeal allowed in the favour of assessee

Summary

Issues:
1. Miscellaneous application to correct the mistake in appeal memorandum.
2. Confirmation of service tax demand against the appellant.
3. Validity of the show cause notice and absence of notice to the appellant.
4. Merits of the case regarding the services rendered.

Analysis:
1. The Miscellaneous Application was filed to rectify an error in the appeal memorandum where the show cause notice dated 29/01/2004 was incorrectly entered instead of the correct notice dated 23/04/2004. The application was allowed to incorporate the correct notice.

2. The appeal challenged the confirmation of a service tax demand of Rs.14,84,782 against the appellant for providing 'Consulting Engineer's Service' to M/s Ispat Industries Ltd. during 1999-2000, along with interest and penalty. The appellant contested the demand.

3. The appellant argued that the show cause notice issued to M/s Ispat Industries Ltd. did not directly demand service tax from the appellant. The adjudicating authority confirmed the demand against the appellant based on their name being mentioned in the notice and confirmation that notices were sent to them. However, the appellant claimed they did not receive any notice for a personal hearing, and the proceedings were flawed due to lack of proper notice to show cause.

4. Upon examination, the Tribunal found that the show cause notice did not contain any demand for service tax from the appellant, and the appellant was not given a chance for a personal hearing. The proceedings were deemed flawed, and the order against the appellant was considered unsustainable. Additionally, on the merits, it was noted that the services provided were related to activities that only became taxable from July 2003 onwards, while the demand in question pertained to the period 1999-2000. Therefore, the impugned order was set aside, and the appeal was allowed.

This judgment highlights the importance of proper notice and procedural fairness in tax matters, emphasizing that without a valid notice and opportunity to be heard, any order passed against a party may be deemed unsustainable in law.