2016 (12) TMI 933 - AT - Service Tax

Classification of services - activity of Data Processing - fall under the head Management Consultancy Services or under the head Business Auxiliary Service - scope of SCN - Held that - we find that the show cause notice was issued to demand the service tax under the category of Management Consultancy service, therefore, the scope of the show cause notice on this point. In the impugned order, the learned Commissioner (Appeals) opined beyond the scope of show cause notice. The activity of the appellant falls under the category of BAS as it is not allege in the show cause notice to demand the service tax under the category of BAS the demand of service tax cannot be confirmed against the appellant under the said category - appeal allowed - decided in favor of appellant-assessee.

Summary

Issues:
1. Appellant's liability to pay service tax under Management Consultancy Service or Business Auxiliary Service (BAS).
2. Scope of show cause notice in demanding service tax.

Analysis:
1. The appellant was initially issued a show cause notice to demand service tax under the category of Management Consultancy Services for Data Processing. The matter was adjudicated, and it was held that the appellant is liable to pay service tax under Management Consultancy Service. The Commissioner (Appeals) later held that the service falls under Business Auxiliary Service (BAS) and demanded service tax accordingly. The appellant challenged this decision, arguing that the Commissioner exceeded the scope of the show cause notice by demanding service tax under BAS. The Tribunal noted that the show cause notice specifically mentioned Management Consultancy Service, and since BAS was not alleged in the notice, the demand for service tax under BAS could not be sustained. Therefore, the impugned order demanding service tax under BAS was set aside, and the appeal was allowed with consequential relief.

2. The appellant's counsel contended that since the show cause notice was issued for Management Consultancy Service and the appellant was found not liable for service tax under that category, the Commissioner had no authority to demand service tax under a different category like BAS. The Tribunal agreed with this argument, emphasizing that the scope of the show cause notice is crucial in determining the validity of any subsequent demand for service tax. As the show cause notice did not mention BAS, the Commissioner's decision to demand service tax under BAS was deemed beyond the scope of the notice and was consequently set aside.