2018 (2) TMI 290 - AT - Service Tax

Scope of SCN - Business Support Services - change in classification of service suo moto - Held that - Held that - at the appellate stage, the Commissioner (Appeals) has changed the classification from business support service to brand promotion service suo motu and unilaterally, which is not permitted under law - this issue has been settled in favor of the assessee in the case of M/s Balaji Contractor Versus Commissioner of Central Excise Jaipur-II 2017 (3) TMI 181 - CESTAT NEW DELHI , where it was held that the tax entry of each type of service has got legal implications with reference to tax liability, classification, quantification, exemption, abatement etc. It is for this reason, the assessee should be put to notice about the correct classification under which the demand was sought to be made, so that defence can be made to reply for such allegation - the impugned order passed by the Commissioner (Appeals) going beyond the SCN is not sustainable in law - appeal allowed - decided in favor of appellant-assessee.

Summary

Issues:
- Classification of service tax liability under business support service or brand promotion service
- Validity of the impugned order passed by the Commissioner (Appeals)

Analysis:
- The appeal was against an order upholding the service tax liability on the retainer fee received by a cricketer from a franchisee. The cricketer was alleged to be providing taxable services to the franchisee without paying service tax. The department issued a show cause notice proposing to demand service tax under business support service, which was confirmed by the original authority. However, at the appellate stage, the Commissioner (Appeals) changed the classification to brand promotion service, which was not part of the original notice. The appellant argued that this change was beyond the scope of the notice and contrary to binding precedent. The appellant contended that they were not providing any service to the franchisee, and the department misconstrued the agreement between them.
- The Tribunal, after hearing both parties and examining the records, found that the change in classification by the Commissioner (Appeals) was not permissible under the law. Citing various decisions in favor of the appellant, the Tribunal held that the impugned order was unsustainable as it went beyond the show cause notice. Therefore, the Tribunal set aside the impugned order and allowed the appeal of the appellant-assessee.