2018 (5) TMI 407 - AT - Service Tax

Demand of service tax - Business Auxiliary Service - classification in dispute, which was not raised at all - Held that - the classification issue is the root of the entire demands therefore it is necessary to first decide the classification - However as accepted by the Ld. Counsel the issue of classification was neither before the Commissioner (Appeals) nor has he decided the same. Therefore we are of the view that the first issue of classification needs to be decided only thereafter the demand could be finalized - appeal allowed by way of remand.

Summary

Issues: Classification of services for service tax demand, proper adjudication process, appeal against Order-in-Original.

In this case, the appellant was engaged in providing services related to export and import consignments through an Inland Container Depot and had obtained Service Tax Registration. The central Excise Officer found that the appellant had not deposited the service tax collected from their services. The adjudicating authority confirmed a demand for service tax under Business Auxiliary Service and GTA service, along with interest and penalties. The Commissioner (Appeals) upheld this decision, leading the appellant to appeal before the CESTAT Mumbai.

The appellant argued that the classification of services as Business Auxiliary Service was incorrect, as their services were more akin to CHA and clearing and forwarding. However, this argument was not raised before the Commissioner (Appeals). The Revenue supported the findings of the impugned order.

The CESTAT Mumbai noted that the issue of classification was crucial to the demands raised. Since the Commissioner (Appeals) did not address this issue, the CESTAT remanded the matter back to the Commissioner (Appeals) to decide on the classification and other related issues. The CESTAT emphasized that all issues were to be kept open for further consideration. The appeal was disposed of by way of remand to the Commissioner (Appeals).

This judgment highlights the importance of proper adjudication processes, including addressing fundamental issues such as classification, before finalizing demands for service tax. It also serves as a reminder for appellants to raise all relevant legal arguments at the appropriate stages of the appeal process to ensure a comprehensive review of the case.