2017 (10) TMI 1122 - AT - Service Tax

Jurisdiction to issue SCN - Whether SCN have been rightly issued by the Service Tax Division, at Saharanpur (the Commissioner of Central Excise & Service Tax, Meerut-I) under the fact that the appellant who are manufacturer of Head light & Tail light, etc. for 2 wheelers, have their Head Office at New Delhi and the Head Office is also independently engaged in other businesses of contract nature? Held that - there is no dispute to the fact that the said elements for services received from M/s Nohmi Bosai Ltd., Japan was paid charges for vetting of design drawing of NN-100 System for Fire Detection & Protection System at 2x250 MW, Bhilai STPS, Bhilai Jharkhand (Chhattisgarh) - Further, the said activity have got no relation with the affairs of the factory at Saharanpur nor any Cenvat credit was transferred by the Head Office to the factory at Saharanpur. The Service Tax Division, at Saharanpur under (the Commissioner of Central Excise & Service Tax, Meerut-I) did not have jurisdiction to issue notice - appeal allowed - decided in favor of appellant.

Summary

Issues: Jurisdiction of Service Tax Division in issuing Show Cause Notice.

Analysis:
1. The main issue in this appeal was whether the Show Cause Notice issued by the Service Tax Division at Saharanpur was rightly issued. The appellant, a manufacturer of Head light & Tail light for 2 wheelers, had their Head Office in New Delhi, independently engaged in other businesses, and separately registered with the Service Tax Department. The question was whether the transaction in question had any relation to the affairs of the factory at Saharanpur, which was separately registered with the Service Tax Department.

2. The Show Cause Notice dated 24/09/2008 proposed a demand of ?3,67,223 on reverse charge basis for Consultancy Engineering Services received by the appellant in the Financial Year 2006-07. The appellant had duly reflected the payment in their books of accounts and balance sheets. The appellant clarified that the payment was for vetting of design drawing of NN-100 System for Fire Detection & Protection System. The Show Cause Notice was adjudicated ex parte, confirming the demand along with interest and imposing a penalty under Section 73 of the Finance Act, 1994. The appeal before the Commissioner (Appeals) was rejected, leading to the present appeal.

3. After hearing both parties, the Tribunal found that the services received from M/s Nohmi Bosai Ltd., Japan, for vetting of design drawing of NN-100 System for Fire Detection & Protection System at Bhilai STPS, Bhilai Jharkhand, had no relation to the affairs of the factory at Saharanpur. It was noted that no Cenvat credit was transferred by the Head Office to the factory at Saharanpur. Based on these undisputed facts, the Tribunal held that the Service Tax Division at Saharanpur did not have jurisdiction to issue the Show Cause Notice. The Tribunal concluded that the impugned order was without jurisdiction and allowed the appeal, setting aside the impugned order. The appellant was entitled to consequential benefits in accordance with the law.