2016 (8) TMI 1121 - AT - Service Tax

Commercial and Industrial Construction Services - service tax demand - Held that - The show-cause notice specifically alleges that the appellant had rendered the services of Manpower Recruitment and Supply Agency Services and directed them to show-cause as to why the tax should not be demanded from them under the said services. The appellant also replied to the show-cause notice on the allegations made. In our view the adjudicating authority should have confined his findings only to the allegations raised in the show-cause notice and should have recorded his findings whether the services rendered by the appellant falls under the category of Manpower Recruitment and Supply Agency services or otherwise. In Para 7.2 of the impugned order the adjudicating authority categorically accepts that though the show-cause notice is raising the demand under Manpower Recruitment and Supply Agency services, he has confirmed the demand under Commercial and Industrial Construction Services. The reasoning given by the adjudicating authority are unsustainable as they do not fit in any school of jurisprudence. In our view, the decisions of Tribunal as cited by the learned Counsel would directly apply in the case in hand and it has to be held that the confirmation of tax liability on the appellant on a category which is not alleged in the show-cause notice is traversing beyond the allegations made in the show-cause notice.

Summary

Issues:
- Discrepancy in service tax liability category as per show-cause notice and adjudicating authority's decision

Analysis:
The appeal was against an order-in-original dated 29.03.2011, where the department alleged that the appellant received a sum for construction work falling under "Manpower Recruitment and Supply Agency services." A show-cause notice was issued for service tax liability, interest, and penalty. The adjudicating authority confirmed the demands under Commercial and Industrial Construction Services. The appellant filed a miscellaneous application to raise additional grounds, which were allowed as they pertained to legal points beyond the show-cause notice.

The appellant argued that the demands were confirmed under a different category than alleged, citing legal precedents. The Departmental Representative contended that the non-discharge of service tax liability was undisputed, justifying the confirmation under Commercial and Industrial Construction Services. However, the Tribunal found that the impugned order went beyond the show-cause notice's allegations. The adjudicating authority confirmed the demand under a different category, contrary to the notice, making the order unsustainable.

The Tribunal held that the adjudicating authority should have limited findings to the show-cause notice's allegations. The confirmation of tax liability under a different category was deemed unsustainable and beyond the notice's scope. As a result, the impugned order was set aside, and the appeal was allowed. The Tribunal emphasized the importance of aligning adjudication with the allegations in the show-cause notice to ensure procedural fairness and legal accuracy.