2015 (1) TMI 488 - AT - Service Tax

Commercial Training or Coaching service - Show Cause Notice (SCN) was not issued - Held that - no show-cause notice was issued to the present appellant. Adjudication order shows that learned adjudicating authority was guided with several decisions without going into factual evidence on records. Adjudication order does not grant any power to learned adjudicating authority to proceed against appellant where there was no foundation to the demand in absence of show-cause notice issued to the appellant against the demand proposed. We appreciate that the show-cause notice is a foundation of the adjudication and without service of show-cause notice defence is denied. That manes adjudication fatal. - The appellant not having been brought home to the charge following the ratio laid down by Hon ble Supreme Court in the judgment in the case of Commissioner of C. Ex., Bangalore vs. Brindavan Beverages (P) Ltd. 2007 (6) TMI 4 - SUPREME COURT OF INDIA the demand of ₹ 2,23,16,485/- for the year 2010-11 does not sustain. - Decided in favor of assessee. In so far as the demand of ₹ 1,07,53,337/- is concerned, Revenue says that there is no finding in the adjudication order as to whether the conditions of notification are fulfilled by the appellant. This aspect also needs verification for which that is also remitted to learned adjudicating authority for verification - Matter remanded back - Decided partly in favour of assessee.

Summary

Issues:
1. Service tax demand for the period 2003-04 to 2007-08.
2. Service tax demand for the year 2009-10.
3. Service tax demand for the year 2010-11.

Analysis:

1. Service tax demand for the period 2003-04 to 2007-08:
The appellant argued that the demand is unsustainable as they had made deposits and Cenvat credit reversals exceeding the service tax demanded. The Chartered Accountant representing the appellant requested scrutiny to resolve the dispute. The Revenue Department acknowledged the appellant's discharge of liability but emphasized the need for verification by the adjudicating authority based on available evidence.

2. Service tax demand for the year 2009-10:
The appellant contended that separate bills were issued for study material, which should be excluded from the gross amount for service charges under a specific notification. The Revenue Department highlighted the lack of material evidence to support the exemption claim and suggested that if the appellant meets the notification conditions, the benefit should not be denied upon further verification.

3. Service tax demand for the year 2010-11:
Regarding this period, the appellant argued that no show-cause notice was issued to them for a specific duration when they were providing commercial training or coaching services before a business transfer. The Revenue Department linked the appellant and another entity, asserting interconnectedness due to shared directorship. However, it was noted that the adjudicating authority lacked the power to proceed against the appellant without a foundation through a show-cause notice. The absence of such notice rendered the demand unsustainable, following the legal precedent laid down by the Supreme Court.

In conclusion, the Tribunal allowed the stay application and partially allowed the appeal, remanding specific aspects back to the adjudicating authority for re-examination following due process of justice. The judgment emphasized the importance of proper foundation through show-cause notices in adjudication processes to uphold the principles of natural justice.