2020 (3) TMI 313 - AT - Service Tax

Validity of SCN - demand under different head - appellant has submitted that the proposal in the show cause notice was for confirmation of demand under Commercial or Industrial Construction Service whereas the demand was confirmed under Works Contract Service and Manpower Supply Agency Service - HELD THAT - On perusal of this Tribunal s decision in the case of M/s Marubeni India Pvt. Ltd., 2016 (8) TMI 676 - CESTAT NEW DELHI , it is noted that it was stated that the demand was raised under Commercial and Industrial Construction Service whereas the same was confirmed under various services other than Industrial Construction Services. In the case of M/s Marubeni India Pvt. Ltd., it was held that as per declaration of law in various cases stated therein allegations are required to be made by revenue very clear in the show cause notice and adoption of classification of service under the heading different than the one proposed in the show cause notice amounts to passing the order beyond the scope of show cause notice. It is very clear that if the confirmation of service tax is under a different category than the one which was proposed in the show cause notice then such confirmation of demand is not sustainable - Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Classification of services under 'Works Contract Service' and 'Manpower Supply Agency Service' different from proposed category in show cause notice.

Analysis:
The Appellate Tribunal CESTAT ALLAHABAD considered the case where the appellants, registered for providing Construction Services, were issued a show cause notice for confirmation of demand under Commercial or Industrial Construction Service. However, the demand was confirmed under 'Works Contract Service' and 'Manpower Supply Agency Service'. The appellant challenged the order before the Tribunal, arguing that if the classification of service differs from the one proposed in the show cause notice, the order is not sustainable. The Tribunal referred to the case of M/s Marubeni India Pvt. Ltd. and emphasized the importance of making clear allegations in the show cause notice. It held that adopting a classification different from the proposed one amounts to passing an order beyond the notice's scope, rendering it impermissible. The Tribunal cited relevant case laws to support this principle, ultimately quashing the impugned order on this ground alone.

The Tribunal noted that the demand was initially raised under a specific category but was confirmed under a different category during adjudication. Citing previous decisions, the Tribunal reiterated that clear allegations are crucial in the show cause notice, and any deviation in classification from what was proposed in the notice is impermissible. By following this legal principle, the Tribunal set aside the impugned order and allowed the appeal, emphasizing that the confirmation of service tax under a different category than proposed in the show cause notice is unsustainable. The Tribunal did not address other grounds raised by the appellant, including the issue of limitation, as the appeal was allowed solely on the basis of the misclassification issue.

In conclusion, the judgment by the Appellate Tribunal CESTAT ALLAHABAD highlighted the significance of maintaining consistency between the proposed classification in the show cause notice and the final determination of service category. Any deviation from the proposed classification without clear allegations in the notice renders the order unsustainable. This case serves as a reminder of the procedural requirements and the necessity for precision in framing show cause notices to ensure fair adjudication and prevent orders beyond the notice's scope.