2018 (4) TMI 619 - AT - Service Tax

Scope of SCN - various construction services - case of appellant is that the SCN as proposed demand of Service tax under the category of CICS whereas the Adjudicating Authority has upheld such demands under the category of WCS after analysing various activities in detail - Held that - It is fairly well settled position of law that the Adjudicating Authority cannot travel beyond the allegation made in the show cause notice. Tribunal in the case Ashish Ramesh Dasarwar vs. CCE&ST, Nagpur 2017 (9) TMI 1001 - CESTAT MUMBAI , in identical issue, has set aside the demand of service tax in a similar situation in which the show cause notice proposed classification under CICS whereas the Adjudicating Authority upheld the demand of Service tax under WCS. Even the demand confirmed under WCS by the Adjudicating Authority are liable to be set aside for the reason that the Adjudicating Authority has traveled beyond the show cause notice. Demand raised on amount received towards transportation and unloading of cement bags from Railway wagon - the Adjudicating Authority has classified the services under Transport of Goods by Road Service whereas the show cause notice had proposed classification of the same under Cargo Handling Services - Held that - nothing is forthcoming in the record justifying the view taken by the Adjudicating Authority to the effect that the trucks which were used for transportation of the goods were belonging to the service recipient - matter remanded to the Adjudicating Authority for denovo decision on the subject. The demand amounting to ₹ 9,11,262/- which is not challenged by the assessee, is upheld. Appeal allowed in part and part matter on remand.

Summary

Issues:
1. Challenge to Service Tax demand confirmation.
2. Classification discrepancy between show cause notice and Adjudicating Authority's decision.
3. Benefit of Works Contract Composition Scheme.
4. Classification of services under Transport of Goods by Road Service vs. Cargo Handling Services.
5. Ownership of trucks used for transportation.

Analysis:
1. The judgment involves appeals by both the assessee and the Revenue against the Order-in-Original No. 10/2011 dated 13.05.2011, challenging different aspects of the impugned order. The Adjudicating Authority confirmed a Service Tax demand of around ?26 lakhs out of a total demand of ?61 lakhs. The assessee contested the confirmation of the demand, while the Revenue appealed against the dropped portion and the grounds for confirming the ?26 lakhs demand.

2. The main contention revolved around the classification of construction activities under Commercial or Industrial Construction Service (CICS) in the show cause notice, which the Adjudicating Authority upheld under Works Contract Service (WCS). The assessee argued that such a change in classification exceeded the scope of the show cause notice, citing a Tribunal decision for support.

3. Regarding the Works Contract Composition Scheme, the Adjudicating Authority granted the benefit despite the assessee not opting for it. The Revenue challenged this decision, but the Tribunal held that the demand confirmed under WCS should be set aside as the Authority went beyond the show cause notice.

4. Another issue concerned the classification of services related to transportation and unloading of cement bags, initially proposed under Cargo Handling Service in the show cause notice but classified under Transport of Goods by Road Service by the Adjudicating Authority. The ownership of trucks used for transportation was disputed, leading to a remand for further examination.

5. The judgment concluded by setting aside the demand under WCS, upholding the uncontested demand of ?9,11,262, and remanding the issue of service classification for transportation for a fresh decision based on documentary evidence. The decision highlighted the importance of adhering to the scope of show cause notices and ensuring proper classification of services based on evidence.