2015 (12) TMI 1358 - AT - Service Tax

Denial of the benefit of 67% abatement under Notifications No. 15/2004 - ST, dated 10.09.2004 and No.1/2006 - ST, dated 01.03.2006 - Inclusion of value of free supplies - Held that - in the adjudication order there is no evidence mentioned which was relied upon to arrive at a finding that there were free supplies of material by the service recipients. It is also seen that the adjudicating authority has recorded the submissions of the appellant that the projects mentioned above were exempt and the reasons therefor given by it (i.e., the appellant). However, we find that in the discussion and finding portion of the impugned order, there is no discussion or finding on the appellant s pleadings/contentions with regard to the non-taxability of the service rendered to IIT Delhi, National Press Centre, Dame Depot of Delhi Metro etc. The observation of the adjudicating authority that in this case the dispute does not relate to the services and service tax payable thereon but is solely revolves around the issue of short payment of service tax due to non-inclusion of cost of raw-materials and goods supplied free by the recipients of service is totally absurd because the dispute clearly relates to the taxability of the service rendered as the appellant had contended that the projects named above were exempt from payment of service tax and, as stated earlier, the issue of free supplies is conspicuous by its absence (rather than presence) in the present case. It seems that the discussion and finding portion of the impugned order is a shoddy and careless cut-and-paste job from another adjudication order which the adjudicating authority may have passed in relation to an earlier show cause notice which finds mention in the show cause notice dated 24.05.2012 related to the impugned order. - we set aside the impugned order and remand the case to the primary adjudicating authority to pass a speaking order taking into account the pleadings and contentions of the appellant - Decided in favour of assessee.

Summary

Issues:
- Confirmation of service tax demand under Commercial or Industrial Construction Service (CICS)
- Denial of abatement benefit due to non-inclusion of cost of material supplied free of cost by service recipients
- Exemption claimed by the appellant for certain projects
- Lack of discussion on appellant's contentions by the adjudicating authority
- Errors and non-application of mind in the impugned order

Confirmation of Service Tax Demand under CICS:
The appeal was filed against the Order-in-Original confirming a service tax demand of Rs. 11,44,81,242 for the period April 2010 to March 2011 under Commercial or Industrial Construction Service (CICS). The demand was based on the assertion that services provided to various entities were liable to service tax under CICS, with the abatement of 67% being denied due to the alleged non-inclusion of the cost of material supplied free of cost by the service recipients.

Denial of Abatement Benefit:
The appellant contended that it was paying service tax under a composition scheme for works contract services and argued that certain projects claimed to be exempt from service tax did not involve free supplies. The adjudicating authority presumed the presence of free supplies and denied the 67% abatement benefit, despite no evidence of free supplies by the service recipients. The Tribunal found the adjudicating authority's observations to be erroneous and highlighted the lack of discussion on the appellant's contentions regarding the non-taxability of specific projects.

Exemption Claimed by the Appellant:
The appellant claimed exemption for various projects, providing details of projects exempt from service tax and those started after a show cause notice. However, the adjudicating authority failed to address the appellant's contentions adequately, leading to a lack of consideration for the claimed exemptions. The Tribunal emphasized the importance of a thorough examination of the appellant's arguments in such cases.

Lack of Discussion by the Adjudicating Authority:
The Tribunal noted serious errors in the impugned order, highlighting the adjudicating authority's failure to engage with the appellant's submissions and contentions effectively. The order was deemed to be a result of careless cut-and-paste actions, with significant discrepancies and inaccuracies in the findings. Such conduct was criticized for undermining the quasi-judicial process and potentially impacting the business environment negatively.

Errors and Non-Application of Mind:
Given the serious flaws in the adjudication process, the Tribunal set aside the impugned order and remanded the case to the primary adjudicating authority for a comprehensive reconsideration. Additionally, a cost of Rs. 10,000 was imposed on the adjudicating authority for passing the erroneous order, emphasizing the need for responsibility and discipline in adjudication matters.