2019 (1) TMI 666 - AT - Service Tax

Principles of natural justice - benefit of discharging 25% of the penalty imposed under Section 78 of the Finance Act, 1994 wrongly extended - Held that - There is no merit in the contention of the learned AR for the Revenue that the appellant would be precluded from raising additional arguments in their defense in the denovo proceedings and the present remand proceedings should put a restriction only to the issues raised earlier in their defense - Since we remand the matter to the adjudicating authority, all issues should be examined afresh - appeal allowed by way of remand.

Summary

Issues:
Appeals filed by Revenue and assessee against the same order-in-original; Extension of penalty benefit under Section 78 of the Finance Act, 1994; Allegation of failure to pay service tax on provided services; Violation of principles of natural justice in passing the impugned order.

Analysis:
The judgment involves two appeals filed by the Revenue and the assessee against the same order-in-original passed by the Commissioner of Service Tax, Mumbai-II. The case revolves around the allegation that the appellant failed to discharge service tax on services provided under "Port Services" and "Supply of Tangible Goods" categories during specific periods. A demand notice was issued for recovery of service tax, interest, and penalty. The assessee contended that the services were not directly to vessel owners but to a specific entity, arguing against the classification of services. Additionally, the appellant raised concerns about the violation of principles of natural justice as the order was passed by a subsequent Commissioner without hearing them.

The Revenue's appeal focused on the extension of the benefit of discharging 25% of the penalty imposed under Section 78 of the Finance Act, 1994. The appellant argued that the order was passed in violation of natural justice as the Commissioner who initially heard the case did not pass the order, leading to a procedural irregularity. The Tribunal acknowledged the violation and set aside the order, emphasizing the importance of adherence to principles of natural justice in adjudicatory proceedings. The Tribunal also rejected the Revenue's contention that the appellant should be restricted from raising additional arguments in the denovo proceedings, ruling that all issues should be examined afresh with a reasonable opportunity of hearing provided to the appellants.

In conclusion, the Tribunal allowed the appeal by way of remand, disposing of the miscellaneous application and the connected proceedings. The judgment underscores the significance of procedural fairness and the right to a full and fair hearing in tax adjudication matters. The decision ensures that all issues raised by the appellants can be considered afresh in the denovo proceedings, maintaining the integrity of the adjudicatory process.