2013 (10) TMI 958 - AT - Service Tax

Defect in issuance of Show Cause Notice - Business Auxiliary Services - appellant being person is running Company-owned Company-operated petrol pump of BPCL. - Held that - show cause notice has been issued to the appellant herein as a Proprietor of M/s. Bombay Garrage (Rajkot) Pvt. Limited. In our view, Private Limited Company can never have a proprietor. To ensure that appellant herein is not a proprietor, we perused the agreement enclosed with the appeal memoranda, entered by M/s. BPCL with M/s. Bombay Garage (Rajkot) Pvt. Limited, in the entire agreement the appellant is shown as Director of M/s. Bombay Garage (Rajkot) Pvt. Limited. Reading of the said agreement indicates that a Private Limited Company entered into contract with BPCL for running a Company-owned Company-operated petrol pump. If that be the fact, in our view, the show cause notice issued to the appellant herein as a proprietor or as an individual for the recovery of service tax, is mis-joinder and is unsustainable in the eye of law, as the show cause notice needs to be issued to the service provider in order to initiate proceedings for recovery of service tax, if any - there being mis-joinder for demanding service tax liability, the impugned order against the current appellant is unsustainable by any stretch of imagination - Decided in favour of assessee.

Summary

Issues Involved: Mis-joinder in service tax liability notice

Analysis:
The judgment by the Appellate Tribunal CESTAT Ahmedabad, delivered by Mr. M.V. Ravindran, addressed the issue of mis-joinder in a service tax liability notice. The case involved a show cause notice issued to the appellant, who was mistakenly identified as the proprietor of a Private Limited Company, in relation to service tax liability under Business Auxiliary Services for running a petrol pump. The tribunal observed that a Private Limited Company cannot have a proprietor and noted that the appellant was actually a Director of the company. Upon reviewing the agreement between the company and BPCL, it was established that the appellant was not a proprietor but a director. The tribunal concluded that the show cause notice misidentified the appellant and was therefore unsustainable in law for initiating proceedings for service tax recovery.

The tribunal highlighted that the misidentification of the appellant as a proprietor in the show cause notice led to a mis-joinder in demanding service tax liability. This error rendered the impugned order against the appellant unsustainable. The tribunal emphasized that the notice should have been issued to the actual service provider, in this case, the Private Limited Company, to initiate proceedings for service tax recovery. Consequently, the tribunal set aside the impugned order and allowed the appeal in favor of the appellant. The judgment clarified the legal requirement for correctly identifying the party liable for service tax and emphasized the importance of procedural accuracy in tax liability notices to ensure compliance with the law.