2013 (8) TMI 148 - AT - Service Tax

Validity of Show-cause Notice - Two show cause notices dated 21.4.2010 and 20.4.2011 were issued for the period April 2008 to March 2011 alleging that the assesee had provided Business Auxiliary Service and had failed to remit tax on amounts received for providing such service Held that - The show cause notices were issued on the basis of a prima facie assumption by Revenue that the assessee was assessable to levy of service tax for providing BAS. The reasons for such prima facie assumption of Revenue were however not specified in the show cause notices. Mere extraction of the entire provisions of Section 65(19) of the Act does not fulfill the requirement - Show cause notices dated 21.4.2010 and 20.4.2011 are invalid. This infirmity is incurable; these show cause notices are therefore quashed. Since the adjudication order is the consequence of the invalid show cause notices, it is also quashed Relying upon the judgment in the case of Kaur & Singh vs. C.C.E., New Delhi 1996 (11) TMI 84 - SUPREME COURT OF INDIA , it has been held that the party to whom a show cause notice is issued must be made aware of the allegation against it and that this is a requirement of natural justice. Unless the assessee is put to such notice, he has no opportunity to meet the case against him Decided in favor of Assesse. Liberty to Revenue to initiate proceeding afresh by issuance of a fresh show cause notice Held that - Appellant reliance on the judgment in the case C.C.E. vs. HMM Ltd. 1995 (1) TMI 70 - SUPREME COURT OF INDIA , is not sustainable, wherein no liberty to Revenue is granted therein to initiate proceeding afresh by issuance of a fresh show cause notice - Where a show cause notice is invalided for violation of due process, and in particular violation of principles of natural justice, a fresh opportunity could be given. The absence of such liberty specified in Judicial orders is not an indicator of a principle that no such liberty inheres Decided against the Assessee.

Summary

Issues involved:
Challenge to show cause notices for vagueness and lack of specificity in attributing liability under Business Auxiliary Service.

Analysis:

Issue 1: Challenge to show cause notices for vagueness and lack of specificity

Summary: The appellant challenged show cause notices alleging vagueness and lack of specificity in attributing liability under Business Auxiliary Service (BAS).

Detailed Analysis: The appellant appealed against a common order in original dated 29.5.2012 passed by the Commissioner, Service Tax, Delhi, regarding two adjudication orders. The show cause notices dated 21.4.2010 and 20.4.2011 accused the appellant of providing Business Auxiliary Service without remitting tax. The appellant contended that the notices were incoherent and did not specify the relevant statutory provisions applied, violating due process and natural justice. The notices were found to be similarly phrased and structured, lacking clarity. The show cause notice dated 21.4.2010 outlined the appellant's service tax refund claim and alleged liability for providing Business Auxiliary Service. However, it failed to specify the exact clause under which the activity fell, leading to ambiguity. The appellant argued that the notices did not inform them of the precise ground for the tax demand, rendering the demand unsustainable.

In a similar case, United Telecoms Ltd. vs. CST, Hyderabad, it was held that a show cause notice must specify the precise provision under which tax is demanded to inform the noticee adequately. The Supreme Court's decision in Kaur & Singh vs. C.C.E., New Delhi emphasized the importance of communicating specific allegations and charges in a show cause notice to meet the requirements of natural justice. The show cause notices in the present case assumed the appellant's assessability to service tax without specifying reasons, rendering them invalid. Mere extraction of statutory provisions without clear attribution of liability was deemed insufficient.

The Tribunal quashed the show cause notices and the subsequent adjudication order due to the violation of natural justice principles. It granted liberty to Revenue to initiate proceedings afresh with a clear, lawful show cause notice. The appellant's contention that previous judgments did not grant such liberty was dismissed, emphasizing the importance of adhering to due process and principles of natural justice.

In conclusion, the appeal was allowed, granting the respondent the liberty to proceed in accordance with the law, emphasizing the necessity of clear, specific show cause notices to ensure fairness and adherence to legal principles.

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