2015 (6) TMI 474 - HC - Service Tax

Vagueness of show cause - non-specification of classification/category of services in the show cause notice - nature of receipt - Held that - A careful perusal of the orders of the adjudicating authority, the Commissioner (Appeals) as also the Tribunal would reveal that the Commissioner (Appeals) has decided the issues on two aspects, viz., one on the vagueness of the show cause notices stating that it is bereft of details and being without clarity and the other on the plea of limitation. The Tribunal, however, in its order, while extracting the portion of the order of the Commissioner (Appeals) was of the view that the Revenue had discharged its burden by producing the statements given by NLC and that the assessees did not dispute it at any point of time and that the entire demand was raised on the basis of the statements provided by NLC. However, this finding of the Tribunal runs conter to the plea raised by the appellants/assessees before the Commissioner (Appeals) as the show cause notices were challenged on the very foundation that they are vague and without particulars as to classification of works that attracts service tax. - Matter remanded back - Decided in favour of assessee.

Issues Involved:
1. Whether the appellant rendered taxable service and was liable to pay service tax merely on the ground of receipt of payments from NLC.
2. Whether the Tribunal is justified in ignoring the decisions of the co-ordinate Bench regarding "non-specification" of classification/category of services in the show cause notice and adjudication order.
3. Whether the Tribunal is justified in ignoring the decision of the Hon'ble Madras High Court regarding the requirement of specific findings as to liability and the inadmissibility of demands based on surmises and conjectures.

Issue-Wise Detailed Analysis:

1. Liability to Pay Service Tax:
The appellants, contractors for Neyveli Lignite Corporation (NLC), were issued show cause notices by the Department, alleging that their activities fell under taxable services, thus requiring them to pay service tax. The appellants contested this, arguing that the show cause notices did not specify the classification of taxable services and were vague. The Commissioner (Appeals) found that the show cause notices lacked clarity and did not specify which parts of the works fell under taxable services. This finding was supported by various decisions of the Tribunal and the Supreme Court, which emphasized the necessity for specificity in show cause notices to allow the appellants to defend their case effectively.

2. Non-Specification of Classification/Category of Services:
The Commissioner (Appeals) noted that the show cause notices and the Orders-in-Original failed to specify the classification of services. The Commissioner cited several precedents, including decisions from the Hon'ble CESTAT and the Supreme Court, which held that vague and non-specific show cause notices are insufficient for sustaining demands. The Tribunal, however, overlooked these precedents and concluded that the Revenue had discharged its burden by producing statements from NLC, which the appellants did not dispute. The Tribunal's conclusion was found to be erroneous as it did not address the appellants' primary contention regarding the vagueness of the show cause notices.

3. Requirement of Specific Findings and Inadmissibility of Demands Based on Surmises:
The Commissioner (Appeals) and the Tribunal both acknowledged that the show cause notices did not provide specific allegations or classifications of the services rendered by the appellants. The Commissioner (Appeals) set aside the adjudication orders on the grounds that the show cause notices were vague and the demands were time-barred. The Tribunal, while remanding the matter back to the adjudicating authority, failed to address the issue of limitation and the requirement for specific findings as mandated by the Hon'ble Madras High Court. The Tribunal's order was found deficient for not considering the appellants' plea on limitation and for not providing a detailed justification for the remand.

Conclusion:
The High Court set aside the Tribunal's order, noting that the Tribunal failed to address the issues of vagueness in the show cause notices and the plea of limitation. The High Court remanded the matter back to the Tribunal to reconsider the findings of the Commissioner (Appeals) and to provide a detailed analysis of the issues raised by the appellants. The remand was directed to ensure that the appellants' contentions are adequately addressed and that the Department does not fill the lacunae in the show cause notices through an open remand. All appeals were allowed by way of remand, and the connected miscellaneous petitions were closed with no order as to costs.

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