2017 (12) TMI 719 - AT - Service Tax

Reverse Charge Mechanism - Business Auxiliary Service and Business Support Service received from service provider abroad - validity of SCN - Held that - Application of mind to the allegation raised in show-cause notice is necessary and learned authority should have read that in the spirit of law and drawn appropriate conclusion. That being absent in his order and he having acted contrary to law. Revenue says that nothing is possible to visualise as to the discharge of tax due by the respondent. Learned adjudicating authority without application of his mind, went against law and aggrieved Revenue. Factual aspects of the case argued by ld. Representative for Revenue warrants to direct learned adjudicating authority to readjudicate the matter in the light of allegation made in the show-cause notice in terms of para 2, 9 to 11 thereof. He shall consider the replies given by the respondent and also the figures submitted and pass appropriate order following due process of justice. At the every stage of adjudication respondent is entitled to fair trial. Petition disposed off.

Summary

Issues:
Taxability of services received and taxable on reverse charge mechanism.

Analysis:
The judgment revolves around the controversy of taxability of services received and taxable on reverse charge mechanism. The Revenue alleged that services received from a foreign service provider abroad were Business Auxiliary Service and Business Support Service, both of which were deemed taxable. The show-cause notice detailed the specific services provided and the corresponding sections of the Finance Act under which they were deemed taxable. The respondent contended that it had discharged tax liability under the reverse charge mechanism as per the law. However, the adjudicating authority did not explicitly confirm the discharge of tax by the respondent, leading to a dispute. The Revenue argued that the allegations in the show-cause notice were well-founded and based on evidence gathered, emphasizing the need for a thorough examination of the allegations and proper application of the law. Conversely, the respondent's advocate highlighted the need for a proper determination of the nature of services provided and the applicability of the reverse charge mechanism. The respondent also pointed out that relevant documents were not considered by the adjudicating authority, urging a re-examination based on the evidence on record.

Regarding the liability on Business Support Service, the respondent's advocate argued that the liability should not be imposed for services provided before a specific date based on established legal precedents. The Revenue, however, contended that the law was already in existence before the specified date and had a retrospective effect, rejecting the respondent's argument. The judgment emphasized the need for a fair trial and directed the adjudicating authority to re-examine the matter considering the show-cause notice, responses from the respondent, and the evidence submitted. The authority was instructed to draft a comprehensive order following due process of justice and examining each allegation and evidence meticulously to decide the matter by a specified date. The judgment concluded by disposing of the appeal and cross-objection in light of the above analysis.