2015 (10) TMI 2356 - AT - Service Tax

Liability of Service Tax - Maintenance and Repair Service - scope of SCN - First Appellate Authority confirmed demand of service tax and interest thereof from 16.05.2008 to 31.3.2009 under the category of Supply of Tangible Goods service - Held That - Appellate authority gone beyond the allegation made in SCN and impugned order to that extent it confirms the liability from 16.5.2008 under category of supply of tangible goods service is unsustainable - Impugned order set aside to that extent - Decided partially in favour of assessee.

Summary

Issues involved: Service tax liability under "Maintenance and Repair Service" and "Supply of Tangible Goods" categories.

Analysis:

Issue 1: Service tax liability under "Maintenance and Repair Service" category
The appeal in question challenged the service tax liability on the appellant under the category of "Maintenance and Repair Service" as per Section 65(64) of the Finance Act, 1994. The adjudicating authority initially held that the appellant's activity of supplying scaffolding on a rental basis falls under this category. However, the first appellate authority allowed the appeal for the period 2004-05 to 15.05.08, stating that supplying scaffolding does not constitute maintenance or repair service. The revenue did not appeal against this decision. The first appellate authority confirmed the demands of service tax and interest from 16.05.2008 to 31.3.2009 under the "Supply of Tangible Goods" service category under Section 65(105) (zzzj) of the Finance Act, 1994.

Issue 2: Allegations exceeding show-cause notice
The Tribunal found merit in the argument presented by the appellant's consultant that the show-cause notice and the original order focused on the appellant providing maintenance or repair services, not on supplying tangible goods. The Tribunal emphasized that the first appellate authority erred by confirming the demand under the "supply of tangible goods" service category without any proposal or clarification in the show-cause notice regarding this aspect. It was established that the first appellate authority exceeded the scope of the allegations in the notice, which is against established legal principles. Consequently, the Tribunal deemed the confirmation of service tax liability under the "supply of tangible goods" service category as unsustainable and set aside that part of the impugned order.

In conclusion, the appeal was allowed to the extent that the confirmation of service tax liability under the "supply of tangible goods" service category was set aside, while the rest of the appeal was disposed of accordingly.