2017 (4) TMI 593 - HC - Service Tax

Validity of subsequent adjudication proceeding - The main ground of challenge to the order passed in the second adjudication proceeding was that the points decided against the appellant were beyond the scope of the SCN - Held that - considering the fact that substantial part of the demand already stands deposited and that the appellant was enjoying an interim order during pendency of the writ petition out of which the present appeal arises, we stay the operation of the impugned judgment and order until disposal of the appeal - matter stayed until the disposal of appeal.

Issues:
1. Validity of notice to show cause issued by the Commissioner of Service Tax.
2. Confirmation of demand and imposition of penalty by the adjudicating authority.
3. Set aside of the order by a learned Single Judge and subsequent fresh adjudication.
4. Challenge to the second adjudication order on grounds beyond the scope of the show cause notice.
5. Interim order of stay granted during the pendency of the writ petition.
6. Stay of the operation of the impugned judgment until disposal of the appeal.

1. Validity of Notice to Show Cause:
The appeal originated from a notice to show cause issued by the Commissioner of Service Tax, demanding payment of Service Tax, Education Cess, S.H.E. Cess, interest, and penalties totaling to a significant amount. The notice required the appellants to respond within 30 days and justify why the mentioned amounts should not be demanded and recovered. The total demand was confirmed partially by the adjudicating authority, who also imposed penalties.

2. Confirmation of Demand and Imposition of Penalty:
After adjudication proceedings, part of the demand was confirmed, penalties were imposed, and the rest of the demand was dropped. However, on a writ petition, the order was set aside, and a deposit of a specific sum was required for the invalidation order to be operational. Fresh adjudication proceedings commenced, leading to the appellant being held liable under certain heads that were previously in their favor.

3. Set Aside of the Order and Subsequent Fresh Adjudication:
The appellant challenged the second adjudication order, arguing that the points decided against them were beyond the scope of the show cause notice. The High Court dismissed the writ petition, stating that the applicability of the sections charged against the petitioners was not incorrect, and the objections raised were duly considered and negated in the impugned order.

4. Challenge to the Second Adjudication Order:
The main ground of challenge to the second adjudication order was that the points decided against the appellant were beyond the scope of the show cause notice. The High Court dismissed the writ petition, emphasizing that the assessee was aware of the charges and had answered them, with objections duly considered and negated in the impugned order.

5. Interim Order of Stay:
During the pendency of the writ petition, the appellants enjoyed an interim order of stay. The appellant had already deposited a substantial amount, considering Cenvat Credit. The High Court granted a stay of the operation of the impugned judgment until the disposal of the appeal, based on the comparative strength of the rival cases and the deposits made by the appellant.

6. Stay of the Operation of the Impugned Judgment:
The High Court stayed the operation of the impugned judgment until the disposal of the appeal, considering the substantial amount already deposited by the appellant and the interim order of stay enjoyed during the pendency of the writ petition. The appeal was scheduled for hearing at a later date, and all necessary formalities were dispensed with for the finalization of the appeal papers.

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