2008 (9) TMI 48 - AT - Service Tax

Appellant, PSU- Commissioner has not considered the preliminary objection and also without awaiting for the reply from appelant, decided the issue confirming the huge demand - In the interest of justice, we deem it proper to set aside the order of the Commissioner and remand the matter for fresh consideration - but failure to follow procedure by revenue as prescribed under circular No. 20/20/94-CX cannot held to be vitiate the SCN which has already been issued as provided for in the statute

Summary

Issues:
1. Failure to follow prescribed procedure in issuing show cause notice.
2. Commissioner's decision without considering appellant's reply.
3. Setting aside Commissioner's order and remanding the matter for fresh consideration.

Analysis:
1. The appellant, a public sector undertaking, received a show cause notice proposing a service tax demand of around Rs.11 crores. The appellant raised a preliminary objection regarding non-compliance with the procedure outlined in the Board's circular No. 20/20/94-CX, which requires discussions to resolve disputes before issuing show cause notices. Despite appearing for a personal hearing, the Commissioner allegedly did not consider the appellant's objection and confirmed the demand without awaiting their reply. The Tribunal noted that failure to follow the prescribed procedure does not invalidate the show cause notice, but emphasized the importance of fairness and justice in the proceedings.

2. The Tribunal observed that the Commissioner's decision to confirm the demand without waiting for the appellant's reply was not in line with principles of natural justice. In the interest of justice, the Tribunal decided to set aside the Commissioner's order and remand the matter for fresh consideration. The Tribunal directed the appellant to submit their reply along with supporting evidence by a specified date, emphasizing that the Commissioner must consider this submission and provide a reasonable opportunity for a hearing before making a decision.

3. Ultimately, the Tribunal allowed the appeal by way of remand, indicating that the stay application was also disposed of. The Tribunal's decision highlighted the importance of procedural fairness and adherence to established guidelines in tax dispute resolution processes. The judgment aimed to ensure that the appellant's rights were protected and that the matter was reconsidered in a just and equitable manner, emphasizing the need for a fair opportunity for the appellant to present their case and for all relevant evidence to be considered before reaching a final decision.