2018 (12) TMI 377 - AT - Service Tax

Advertising Agency Services - outward foreign exchange remittances - case of Department is that the appellant is recipient of imported services falling under the category of Advertising Agency Services ? - Held that - It is apparent and admitted fact for the present appeal that proposed demand of ₹ 2,90,23,827/- has been reduced to ₹ 4,58,833/-. The Adjudicating Authority below has considered various documents on record to hold that demand was wrongly proposed in the show cause notice without looking into the documents as that of certificate from the bank where appellant maintains account. There is a catena of judgments to hold that adjudication cannot go beyond the scope of show cause notice. We draw our support from case relied upon by the appellant wherein it was held that the demand which is not permissible under any head to be proposed under the show cause notice, the imposition thereof is absolutely not permissible. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Classification of imported services under 'Advertising Agency Services'.
2. Validity of the demand raised by the Adjudicating Authority.
3. Scope of the show cause notice and the principle of adjudication.

Classification of imported services under 'Advertising Agency Services':
The appellant, engaged in the manufacture and export of handmade carpets, was alleged to be the recipient of imported services falling under the category of 'Advertising Agency Services'. The Department observed that the appellant received services worth &8377; 23,48,20,607/- and failed to discharge the tax liability of &8377; 2,90,23,827/-. The Adjudicating Authority confirmed a demand of &8377; 4,58,833/- under different categories, including 'Intellectual Property Services', 'Management Maintenance & Repair Services', and 'Banking and other Financial Services'.

Validity of the demand raised by the Adjudicating Authority:
The appellant argued that the classification of services was not proposed in the show cause notice, making the confirmation unsustainable. The Adjudicating Authority had reduced the proposed demand from &8377; 2,90,23,827/- to &8377; 4,58,833/-, considering various documents and certificates from the bank. The Tribunal found the demand beyond the scope of the show cause notice and set it aside, relying on the principle that adjudication cannot exceed the notice's scope.

Scope of the show cause notice and the principle of adjudication:
The Tribunal held that the demand proposed under 'Advertising Agency Services' was impermissible as it was not part of the show cause notice. Citing legal precedents, the Tribunal emphasized that any demand not permissible under the notice could not be imposed. The order was set aside to that extent. However, the Tribunal found no issue with the dropped part of the demand. The appeal was allowed based on the settled legal position and the merits of the case.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT ALLAHABAD highlights the issues, arguments presented, and the Tribunal's decision on each aspect of the case, ensuring a comprehensive understanding of the legal judgment.