2019 (5) TMI 228 - AT - Service Tax

Validity of SCN - It was alleged that the department did not classify the services provided by the appellant but proceeded to demand service tax on all receipts from NLC without mentioning under which category the service tax is due from the appellant - HELD THAT - There is no infirmity in that part of the order of the Commissioner (Appeals) holding that the SCN per se is not maintainable. The lower appellate authority has analysed the issue in a proper manner and has arrived at the conclusions - appeal of Revenue dismissed. Validity of cross-objections filed by the respondents - HELD THAT - When the SCN itself has been held as non-maintainable, there cannot be any justification to uphold part of the demand, only on the ground that it has been paid up by the assessee. Such a decision cannot have any legal sanctity and is not supported by law. This being so, the remnant demand of ₹ 4,29,107/- upheld by the Commissioner (Appeals) will also not sustain and set aside. The cross objection succeeds to that extent. Appeal disposed off.

Summary

Issues:
- Classification of taxable services provided by the assessee to M/s. Neyveli Lignite Corporation (NLC).
- Service tax liability and evasion by the assessee.
- Imposition of penalties under various provisions of law.
- Appeal against the original authority's order confirming the demand.
- Commissioner (Appeals) decision on the maintainability of the appeal.
- Cross-objection filed by the assessee regarding the confirmation of a part of the demand.
- Legal sanctity of upholding part of the demand paid by the assessee when the SCN is non-maintainable.

Analysis:
1. Classification of Taxable Services:
The department alleged that the assessee had not discharged service tax liability on the taxable services provided to NLC, leading to a demand of &8377; 30,78,783/- with interest and penalties. The Commissioner (Appeals) noted that the department did not classify the services provided by the appellant, demanding service tax on all receipts from NLC without specifying the category. It was observed that the appellant had also rendered non-taxable services during the period in question. Consequently, the demand proposed in the notice was not entirely confirmed, although an amount of &8377; 4,29,107/- paid by the assessee was upheld.

2. Maintainability of Appeal:
The Commissioner (Appeals) held that the appeal was non-maintainable due to the lack of specific classification of services by the department. The lower appellate authority analyzed the issue thoroughly and concluded that the demand exceeding the amount already paid by the assessee should be set aside. The Tribunal found no fault in this part of the order and dismissed the department's appeal.

3. Cross-objection by the Assessee:
The assessee filed a cross-objection against the confirmation of the &8377; 4,29,107/- demand in the impugned order. It was argued that if the notice was deemed non-maintainable, then confirming part of the demand solely because it was paid by the assessee was unjustifiable. The Tribunal agreed with this contention, stating that upholding the remnant demand on such grounds lacked legal sanctity and was unsupported by law. Consequently, the remnant demand was set aside, allowing the cross-objection.

In conclusion, the Tribunal dismissed the department's appeal while allowing the cross-objection filed by the assessee, thereby setting aside the remnant demand of &8377; 4,29,107/-. The decision emphasized the importance of proper classification of services for determining service tax liability and the necessity of maintaining legal sanctity in upholding demands, especially when the notice is deemed non-maintainable.