2014 (2) TMI 712 - AT - Service Tax

Natural justice - adjudicating authority failed to consider the submissions made by the appellants - Business Auxiliary Service - Held that - The Authority committed a gross error in omitting to refer to, analyse and apply the decision of the full Bench of the Tribunal in Paul Merchants Ltd. While the counsel for the appellant contends that this omission is by design; the ld. A.R. for Revenue would contend that the omission is a default and unintentional. In any event this omission is fatal; and at least amounts to casual adjudication. An adjudicating authority, even where one is a departmental officer but is performing a judicial function, must bring to his function the minimum standards of fairness, neutrality and professionalism, in the discharge of functions. A judicial function requires a neutral appreciation of facts; due and conscious reference to the material on record; carefully and precise statement of the competing contentions and precedents if any relied upon by either party; analysis of facts; of the relevant statutory provisions and of precedents referred, followed by a synthesis of the culled out legal facts and the applicable provisions of law and the principles culled out from the precedents. Only thereupon must an adjudication record conclusions. Failure to adhere to the minimal standards of adjudicatory discipline is a compelling inference where an adjudication authority fails to record all relevant contentions, the statutory provisions and the authorities cited; fails to analyse the facts and the law; and fails to record conclusions after following the rigour of the preceding process. The order impugned herein is in this sense a non-speaking order bereft of relevant analysis and is therefore perverse. The respondent/adjudication authority shall record independent conclusions while disposing of the proceedings afresh. The consequence of this casual adjudicatory approach has not only burdened the assessee with avoidable litigation but had also added to the docket load of this Tribunal. We therefore allow the appeal as above with costs of ₹ 10,000/- payable to the appellant/ assessee within two weeks from the date of receipt of a copy of this order. - Decided in favor of assessee.

Summary

Issues Involved:
1. Validity of the adjudication order dated 31.7.2013.
2. Non-application of mind by the adjudicating authority.
3. Classification of services provided within and outside India.
4. Applicability of the Export of Services Rules, 2005.
5. Consideration of precedents and judicial decisions.
6. Imposition of penalties and extended period of limitation.

Detailed Analysis:

1. Validity of the Adjudication Order:
The appeal challenges the adjudication order dated 31.7.2013, which confirmed service tax liability for providing 'Business Auxiliary Service' (BAS) and 'Management, Maintenance or Repair Service' (MMR) for specified periods. The order was based on two show cause notices covering October 2008 to March 2009 and April 2009 to March 2010.

2. Non-application of Mind by the Adjudicating Authority:
The appellant contended that the adjudicating authority failed to consider specific defenses and written submissions, leading to a perverse order. The Tribunal found this grievance well-founded, highlighting that the adjudicating authority did not analyze or set out conclusions on the appellant's defenses, introducing a fatal infirmity in the order.

3. Classification of Services Provided Within and Outside India:
The appellant, registered under the Act for BAS, MMR, and Erection Commissioning or Installation Service (ECIS), argued that services provided outside India were not taxable under the Export of Services Rules, 2005. The adjudicating authority failed to address the appellant's classification of services and the non-taxability of services provided outside India.

4. Applicability of the Export of Services Rules, 2005:
The appellant claimed that the consideration received for BAS and MMR services provided outside India was not liable to tax under the Export of Services Rules, 2005. Despite the appellant's detailed submissions, the adjudicating authority did not analyze these rules or relevant precedents, including the decision in Paul Merchants Ltd. vs. C.C.E., Chandigarh.

5. Consideration of Precedents and Judicial Decisions:
The adjudicating authority omitted to refer to and analyze the full Bench decision in Paul Merchants Ltd., which dealt with similar circumstances. The Tribunal emphasized that an adjudicating authority must consider binding precedents and judicial decisions, which outweigh contrary clarifications in Board Circulars.

6. Imposition of Penalties and Extended Period of Limitation:
The appellant contested the imposition of penalties and the invocation of the extended period of limitation. The adjudicating authority failed to address these contentions and the relevant judicial decisions cited by the appellant.

Conclusion:
The Tribunal quashed the adjudication order dated 31.07.2013, finding it to be a non-speaking order lacking relevant analysis. The matter was remitted to the adjudicating authority for fresh determination, starting from the stage after receipt of the written submissions dated 09.07.2013. The adjudicating authority was directed to pass a speaking order de novo, without any pronouncement on the substantive merits of the case. The appeal was allowed with costs of Rs. 10,000/- payable to the appellant within two weeks.