2018 (7) TMI 270 - AT - Service Tax

Validity of SCN - Classification of Services - Held that - It is the settled law that the show cause notice cannot be permitted to be changed at the stage of Adjudication/Appellate proceeding, which is required to be adjudicated for the charges in the show cause notice and nothing beyond - there is no infirmity order passed by the Ld. Adjudicating Authority - appeal dismissed - decided against appellant.

Summary

Issues:
Classification of service for Service Tax liability.

Analysis:
The case involved a dispute regarding the classification of services provided by a respondent for the purpose of Service Tax liability. The respondent, engaged in providing composite Mining Services, was issued a show cause notice for not registering for Service Tax payment for the period September 2005 to June 2006. The contention of the respondent was that they believed they were not liable for Service Tax during that period. The Adjudicating Authority dropped the demand raised in the show cause notice, amounting to ?63,53,687, on the grounds that the services provided fell under "Mining services" which were not taxable before June 2007.

In the impugned order, the Adjudicating Authority considered the entire contract as a whole and concluded that the services provided would be classified as "Mining services" rather than falling under the purview of Service Tax. The respondent's argument was supported by various judgments and a decision of the Tribunal, emphasizing that under a composite contract covering activities from site formation to segregation of ores, the services should be treated as "Mining services" chargeable to Service Tax only from June 2007 onwards.

The Department, aggrieved by the impugned order, sought to classify the services as "Site formation service." However, the Tribunal held that allowing this appeal would amount to changing the charges in the show cause notice, which was impermissible at that stage. The Tribunal relied on several case laws to support the principle that the charges in the show cause notice must be adjudicated as per their terms and cannot be altered during the adjudication or appellate proceedings.

Ultimately, the Tribunal found no infirmity in the order passed by the Adjudicating Authority and upheld the decision, dismissing the appeal and disposing of the case. The judgment highlighted the importance of adhering to the charges specified in the show cause notice during the adjudication process and emphasized the need for consistency in the application of legal principles and precedents.