2016 (9) TMI 434 - AT - Service Tax

Demand of differential duty - Consulting Engineering services - consideration received from the client including the reimbursable expenses - two show cause notices issued, first for the demand of Service Tax for the period of 1.10.2002 to 31.3.02 by invoking the longer period of limitation and second for raising differential demand for the period 1.4.2007 to 31.3.08 - Held that - we agree that inasmuch as the issue involved in both the show cause notice is the same and inasmuch as the first show cause notice stand quashed by the Hon ble Delhi High Court on merits of the case, ratio of the same has to be applied and the impugned order is required to be held as unsustainable. - Decided in favour of appellant with consequential relief

Summary

Issues:
1. Applicability of service tax on full consideration received, including reimbursable expenses.
2. Validity of show cause notices for differential demands of duty.
3. Impact of High Court judgment on quashing the first show cause notice on the second notice.
4. Adjudication of the demands, interest, and penalty by the Commissioner.

Analysis:
1. The appellants were providing Consulting Engineering services and were registered for service tax payment. The Revenue contended that service tax should be paid on the full consideration received, including reimbursable expenses, leading to two show cause notices for differential demands of duty.

2. The first notice, issued on 17.3.2008, demanded around &8377; 3.55 crores for the period 1.10.2002 to 31.3.2002, invoking a longer limitation period. The second notice, dated 24.10.2008, raised a demand of approximately &8377; 1.50 crores for the period 1.4.2007 to 31.3.2008. The Commissioner adjudicated both notices, confirming the demands, interest, and imposing penalties, leading to the present appeal.

3. The appellants challenged the first notice before the Delhi High Court, which quashed it in a judgment reported as M/s. Intercontinental Consultants and Technocrats Pvt. Ltd. vs. Union of India. The Chartered Accountant argued that since the first notice was quashed, the impugned order based on it should not stand. He also pointed out that the second notice, issued on similar grounds but for a different period, should also be dropped due to the quashing of the first notice.

4. The Tribunal reviewed the High Court's judgment on the first notice and found that since the issues in both notices were the same and the first notice was quashed on its merits, the impugned order confirming the demand based on the first notice was unsustainable. Consequently, the Tribunal set aside the impugned order and allowed the appeal in favor of the appellant, providing consequential relief.

This detailed analysis of the judgment highlights the key legal issues, arguments presented, and the Tribunal's decision, ensuring a comprehensive understanding of the case.