2023 (12) TMI 677 - AT - Service Tax

Scope of SCN - dealing with an issue not raised in SCN - Non-payment of service tax - maintenance and repair services - manpower recruitment agency services - period pre and post to 01.06.2007 - invocation of extended period of limitation - HELD THAT - A show cause notice is the foundation of any demand but the Commissioner (Appeals) proceeded to comment upon the order passed by the Joint Commissioner observing that the Joint Commissioner just took recourse to the show cause notice. The Commissioner (Appeals) could not have dealt with an issue not raised in the show cause notice. Period prior to 01.06.2007 - HELD THAT - Once it was found as the fact that the nature of services provided by the appellant were works contract service and this service had not been carved out of the earlier entries relating to maintenance and repair services and manpower recruitment agency services, it has to be held that no service tax could have been demanded. In any case, the appellant had not rendered manpower recruitment services and, therefore, even otherwise, the demand could not have been confirmed under a different category. In fact, no reasons have been given by the Commissioner (Appeals) to confirm the demand, except stating that the show cause notice can be ignored. Period post 01.06.2007 - HELD THAT - It is not in dispute that the appellant had rendered works contract and had also paid service tax. Without giving any reasons as to why service tax demanded under maintenance and repair services and manpower recruitment agency services was required to be confirmed, the Commissioner (Appeals) simply confirmed the demand holding that since the appellant had applied for registration, the demand against service tax was required to be confirmed. In any view of the matter, once the service tax is proposed under a particular category it cannot be confirmed under a different category. The order dated 24.10.2013 passed by the Commissioner (Appeals), therefore, cannot be sustained and is set aside - Appeal allowed.

Summary

Issues involved:
The issues involved in the judgment are the classification of services provided by a contractor under works contract service, maintenance and repair services, and manpower recruitment agency services for the purpose of levying service tax, as well as the validity of the demand raised by the Department based on the nature of services provided.

Details of the Judgment:

Issue 1 - Classification of Services Provided:
The appellant, a contractor, was alleged to have provided maintenance and repair services and manpower recruitment agency services to certain entities without paying service tax. However, the appellant contended that the services provided were actually in the nature of works contract service. The Joint Commissioner, after reviewing the documents, concluded that the services rendered fell under works contract service category, specifically commercial or industrial construction and construction of complex services, and not under maintenance or repair services or manpower recruitment agency services. The proceedings initiated against the appellant were dropped based on this classification.

Issue 2 - Validity of Demand Raised:
The Department appealed the decision, and the Commissioner (Appeals) divided the period pre and post 01.06.2007. For the post-2007 period, the Commissioner upheld the demand as the appellant had not produced proof of works contract or invoices. However, for the pre-2007 period, the Commissioner criticized the Joint Commissioner's decision and confirmed the demand, stating that the appellant could not evade tax and had not provided sufficient proof contrary to the findings. The Commissioner's approach was deemed contrary to established principles, as he commented on issues not raised in the show cause notice.

Conclusion:
The Tribunal set aside the Commissioner (Appeals) order, stating that the appellant's services were correctly classified as works contract service and that no service tax could be demanded for the pre-2007 period. The Tribunal also noted that the demand for the post-2007 period could not be confirmed under a different category than proposed. Therefore, the appeal was allowed, and the Commissioner (Appeals) order was not sustained.

This summary provides a detailed overview of the issues involved in the judgment and the Tribunal's decision on each issue, preserving the legal terminology and key points from the original text.