2024 (7) TMI 691 - AT - Service Tax

Violation of principles of natural justice - opportunity of personal hearing not provided - Classification of activity - Supply of Tangible Goods Service or Deemed Sale? - activity of leasing of Air Separation Plant by the Appellant to its customers for manufacturing industrial gases such as oxygen and nitrogen - HELD THAT - It is found that out of four show cause notices, in three show cause notices dated 26.07.2013, 18.11.2013 16.10.2014, the Adjudicating Authority has not granted the personal hearing and passed the ex-parte order. It is also observed that in the show cause notice dated 16.10.2014, there is an additional issue that whether the activity of management, maintenance and repair service can be categorized as supply of tangible goods service or otherwise. Therefore, by passing a common order in respect of all these show cause notices where the effective hearing was not granted, the order is suffered from principles of natural justice. The whole issue needs to be reconsidered after granting the sufficient opportunity of personal hearing - Appeal allowed by way of remand.

Summary

Issues:
1. Whether leasing of Air Separation Plant for manufacturing industrial gases constitutes 'Supply of Tangible Goods Service' or 'Deemed Sale'.
2. Whether demand raised on management, maintenance, or repair services under 'supply of tangible goods services' category is valid.
3. Violation of principles of natural justice due to lack of personal hearing in three show cause notices.

Analysis:

Issue 1:
The main issue in this case was whether leasing an Air Separation Plant for manufacturing industrial gases constitutes 'Supply of Tangible Goods Service' or 'Deemed Sale'. The appellant argued that by transferring the right to possession and control to the customer, it should be considered a deemed sale. The appellant relied on various judgments to support their position. However, the Tribunal did not delve into this issue as the entire matter was remanded back to the adjudicating authority due to a violation of natural justice.

Issue 2:
Another aspect raised was the demand raised on management, maintenance, or repair services under the category of 'supply of tangible goods services'. The appellant contended that this categorization was incorrect. The Tribunal did not provide a detailed analysis on this issue as the entire matter was remanded back to the adjudicating authority for reconsideration after granting a proper opportunity of personal hearing.

Issue 3:
The violation of principles of natural justice was a crucial point in this case. The Tribunal observed that in three show cause notices, the Adjudicating Authority did not grant a personal hearing and passed ex-parte orders. This lack of personal hearing was deemed a violation of natural justice, leading the Tribunal to set aside the impugned order and allow the appeal by remanding the matter back to the adjudicating authority for a fresh consideration after ensuring a proper opportunity for personal hearing.

In conclusion, the judgment primarily focused on the procedural irregularity of not providing a personal hearing in three show cause notices, which led to a violation of natural justice. The substantive issues regarding the classification of services and demands raised were not extensively discussed as the entire matter was remanded back for reconsideration.