2015 (10) TMI 1113 - HC - Service Tax

Appeal under Section 35G under Central Excise Act, 1944 Respondents applied for registration under the category of Technocrats Technical Consultancy Department contended that the services rendered fall under the category of Consulting Engineering Demand of tax made from the Respondents without issuing SCN as required under Section 73. Held That - No SCN was issued to the Respondent placing reliance on the letter issued by Superintendent; as such it does not satisfy the requirement of notice - Letter issued was more of an advisory nature and demand of money in the name of tax is in violation - Appeal dismissed being devoid of merits against the Revenue.

Summary

Issues:
1. Justification of setting aside the speaking order due to non-issuance of show cause notice.
2. Justification of setting aside the order in appeal due to the absence of a show cause notice.
3. Ignoring a previous decision regarding non-issuance of show cause notice.

Issue 1:
The respondent, a partnership firm, sought registration under the Finance Act, 1994, as Technocrats Technical Consultancy but was advised by the Superintendent to register as a Consulting Engineer. The Deputy Commissioner later demanded service tax for a specific period. The respondent appealed the order, arguing that no show cause notice was issued as required under Section 73 of the Finance Act, 1994. The Tribunal agreed, emphasizing the necessity of such notice for initiating proceedings. The appellant contended that although no notice was issued, a detailed explanation was submitted by the respondent, leading to a quantified amount payable, constituting substantial compliance. However, the Tribunal's finding of a fundamental breach of compliance with statutory provisions was upheld, underscoring the critical nature of issuing a show cause notice to initiate proceedings.

Issue 2:
The Tribunal set aside the Commissioner's order due to the absence of a show cause notice, emphasizing the statutory requirement for such notice under Section 73 of the Finance Act, 1994. The respondent's argument that the Tribunal's decision was unassailable was supported by the clear statutory mandate necessitating the issuance of a notice by an authorized officer, not below the rank of Assistant Commissioner/Deputy Commissioner. The letter dated 17.08.2001, cited by the appellant as fulfilling the notice requirement, was deemed inadequate as it lacked specific details such as the amount payable and the relevant period. The procedural necessity of issuing a notice and soliciting an explanation was deemed essential to prevent arbitrary tax demands, ensuring compliance with constitutional safeguards.

Issue 3:
The Tribunal's decision, dated 08.05.2007, was challenged in an appeal filed years later, raising questions regarding the appeal's timeliness. Despite the applicability of Section 35 of the Act to Service Tax appeals from 2010, the appeal was considered untimely. Additionally, the appeal's dismissal was upheld due to the tax demand falling below the prescribed limit, rendering the appeal meritless. The prohibition on entertaining appeals below a certain threshold was acknowledged by both parties, further supporting the dismissal of the appeal on this ground. Consequently, the appeal was deemed devoid of merits and dismissed, with no costs imposed.

Conclusion:
The judgment highlights the significance of complying with statutory provisions, particularly the issuance of show cause notices in tax matters. The dismissal of the appeal underscores the adherence to procedural requirements and timeliness in legal proceedings, ensuring the safeguarding of constitutional principles and statutory mandates.