2024 (11) TMI 524 - AT - Service Tax

Demand of service tax - violation of the principle of natural justice - service tax liability was calculated on the basis of third party information received from the income tax department for the financial year 2014-15 2015-16, in which the appellant had reflected gross receipts as per FORM 26AS u/s 194H (Commission or Brokerage Service) of Income Tax, 1961 of the financial year resulted in short payment of service tax HELD THAT - While passing the Order-in-Original the adjudicating authority has not considered the reply of the appellant which was duly filed and thereby violated the principles of natural justice. It appears that the adjudication order was passed without considering the reply of the appellant and it has been copy pasted from some other order wherein the service tax demand was only Rs. 2,85,148/- . It is a settled law that any order in violation of the principles of natural justice is non-est. We are of the considered opinion that this matter needs to be remanded back to the Original Authority, therefore, we set aside the impugned order and remand the matter back to the original authority with a direction to pass a fresh order after complying with the principles of natural justice and after affording adequate opportunity of hearing to the appellant and thereafter pass a reasoned order.

Summary

Issues:
1. Appeal against rejection of appellant's appeal by Commissioner (Appeals) regarding service tax liability.
2. Allegations of mismatch in gross service receipt and services declared in ST-3 returns for the financial years 2014-15 to 2015-16.
3. Calculation of service tax liability based on third party information from the income tax department.
4. Show cause notice issued for demand of service tax with details of short payment.
5. Violation of principles of natural justice in passing the adjudication order.
6. Request for remand of the case to the adjudicating authority for considering the appellant's reply and ensuring a fair hearing.

Analysis:
The judgment pertains to an appeal against the rejection of the appellant's appeal by the Commissioner (Appeals) regarding service tax liability. The appellant, registered under the Category of providing services falling under section 65 of the Finance Act, 1994, faced allegations of a mismatch in gross service receipt and services declared in ST-3 returns for the financial years 2014-15 to 2015-16. The service tax liability was calculated based on third party information, resulting in a demand notice for short payment of service tax. The appellant's detailed reply to the show cause notice was followed by the confirmation of the demand along with interest and penalty. The appellant raised concerns about the violation of natural justice, stating that the adjudication order was passed without considering their reply and appeared to have been copied from another case. The appellant requested a remand of the case to the adjudicating authority for a fair hearing.

Upon hearing both parties and reviewing the material, the Tribunal acknowledged the failure of the adjudicating authority to consider the appellant's reply, thus violating the principles of natural justice. It was noted that the order seemed to have been copied from another case, indicating a lack of proper consideration. The Tribunal emphasized that any order violating natural justice principles is invalid. Consequently, the Tribunal set aside the impugned order and remanded the matter back to the original authority with directions to pass a fresh order after ensuring compliance with natural justice principles and providing the appellant with a fair hearing. The original authority was instructed to issue a reasoned order within three months of receiving the certified copy of the Tribunal's order.