2017 (9) TMI 265 - AT - Service Tax

Validity of SCN - whether the show cause notice have been issued without alleging short payment/non-payment of Service Tax and/or is vague? - Held that - the SCN is defective as it do not have or annexed the contents of letter dated 21-1-2009 issued by DGCEI to the office of Commissioner, Customs and Central Excise, Meerut-I. Non supply of copy of information received by DGCEI from EPFO or any other source, render the SCN vague - the SCN is not tenable as the same is based on some incomplete information, which is not sustainable, leaving the assessee in dark as to what is the gist of accusation - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Validity of the show cause notice alleging short payment/non-payment of Service Tax and vagueness.

Analysis:
The main issue in this appeal was whether the show cause notice issued was valid in alleging short payment/non-payment of Service Tax and if it was vague. The show cause notice was based on intelligence gathered by DGCEI, Bangalore, indicating that a bank was providing taxable services related to the operation of bank accounts and commission earned. The notice alleged that the bank had not discharged its Service Tax liability on these services and commissions. However, upon scrutiny, it was found that the notice lacked essential details such as the contents of the intelligence report and information received from EPFO, rendering it vague and incomplete. The notice did not specify any wrongful actions by the appellant or reference to their accounting records. Consequently, the Tribunal found the notice defective and not sustainable, as it was issued mechanically without proper application of mind, leaving the appellant unaware of the specific accusations against them.

The show cause notice was adjudicated upon, resulting in a reduced amount of confirmed Service Tax short paid, along with interest and penalties imposed under relevant sections of the Finance Act, 1994. The appellant then appealed to the Commissioner (Appeals), who upheld the demand and penalties under certain sections but set aside the penalty under Section 76 of the Finance Act. Upon further review by the Tribunal, it was determined that the show cause notice was flawed due to its lack of essential details and incomplete information, leading to its invalidity. The Tribunal concluded that the notice did not provide the appellant with a clear understanding of the accusations against them, and therefore, set aside the impugned order and allowed the appeal. The appellant was granted consequential benefits as per the law, highlighting the importance of a valid and specific show cause notice in legal proceedings.

In conclusion, the judgment focused on the validity and adequacy of the show cause notice in alleging short payment/non-payment of Service Tax and the importance of providing complete and specific information to the accused party. The Tribunal emphasized the necessity of a well-founded notice that clearly outlines the accusations, ensuring transparency and fairness in legal proceedings.