2018 (6) TMI 128 - AT - Service Tax

Scope of SCN - details of income head not provided in SCN - Short payment of service tax - banking and financial services - Held that - The SCN was issued on the basis of Profit and Loss account of the appellant but total taxable value shown in the SCN is ₹ 7,12,46,826/-, however the SCN has not given any bifurcation of this consolidated amount. It is obvious that appellant being a provider of banking and financial services providing taxable and exempted service. Therefore it is necessary to show the individual account head and the amount of such account before ascertaining that whether all such accounts heads are on account of taxable service or otherwise. It is clear that the appellant in the reply seeking the detail of income head considered for taxable value is legitimate and without such detail neither show cause notice is justified nor it is on the principles of natural justice - The adjudicating authority directed to first provide the break up of amount of ₹ 7,12,48, 826/- under various account head and the same may be put to notice to the appellant - appeal allowed by way of remand.

Issues:
1. Short payment of service tax for the period from 2005-06 to 2008-09.
2. Confirmation of demand by the departmental authority.
3. Appellant's appeal against the orderin-original.
4. Reduction of liability and penalties under different sections.
5. Lack of detailed bifurcation in the show cause notice.
6. Violation of principles of natural justice.
7. Appeal for setting aside the demand based on lack of information.

Analysis:
1. The case involves a Co-operative Credit Society Ltd. providing Banking and Financial Services, facing a discrepancy in the payment of service tax for the period from 2005-06 to 2008-09. The departmental authority observed a short payment of service tax, leading to a show cause notice and subsequent adjudication confirming the demand. The appellant appealed against the original order, which was modified by the Ld. Commissioner to reduce the liability to ?13,10,200, setting aside penalty under Section 76 but upholding penalties under Sections 77 & 78 and Rule 7C of Service Tax Rules, 1994. The appellant, aggrieved by the impugned order, filed the present appeal.

2. The appellant contended that they had been discharging the correct service tax liability but faced challenges due to the lack of detailed information in the show cause notice regarding the taxable value and specific account heads. The appellant argued that without such information, confirming the demand would violate the principles of natural justice. The Revenue reiterated the findings of the impugned order.

3. Upon careful consideration, the Tribunal found that the show cause notice lacked a detailed bifurcation of the consolidated taxable value, crucial for determining the tax liability accurately. The appellant's request for specific details of income heads considered taxable was deemed legitimate, highlighting the necessity for providing such information for a fair assessment. The Tribunal observed that both the adjudicating authority and the Commissioner (Appeals) had overlooked the appellant's valid concerns, leading to an arbitrary confirmation of the demand.

4. Consequently, the Tribunal set aside the impugned order and remanded the matter to the adjudicating authority. The adjudicating authority was directed to provide a breakdown of the taxable amount under various account heads, allowing the appellant to explain their defense on each head. The authority was instructed to determine the tax liability after assessing whether income from each head was taxable or exempted. The appeal was disposed of through remand, emphasizing the importance of providing detailed information for a fair adjudication process.

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