2018 (7) TMI 918 - AT - Service Tax

Principles of Natural Justice - opportunity of being heard not provided - Works Contract Service - non-payment of service tax - registration also not obtained - Held that - While passing the order under challenge, the Appellant has not been heard. This amounts to the violation of the basic principle of natural justice, audi alteram partem . For this reason itself, the remand of the matter for being readjudicated is opined to be the appropriate remedy. Also, for the reason that the Appellant has acknowledged to provide the Department all the relevant documents to help the Department to recalculate the demand, the matter is being remanded. Appeal allowed by way of remand.

Summary

Issues:
- Confirmation of demand of Service Tax
- Penalties under Sections 77 and 78 of the Finance Act
- Allegation of not obtaining Service Tax registration
- Liability for Work Contract Service
- Violation of natural justice principle

Confirmation of demand of Service Tax:
The Appellate Tribunal CESTAT NEW DELHI addressed the issue of confirming a demand of Service Tax amounting to ?1,64,44,454 along with penalties under Sections 77 and 78 of the Finance Act. The Appellant, engaged in providing construction services, was alleged to have not obtained Service Tax registration and not discharged their liability for Work Contract Service during the period 2008-09 to 2011-12. This led to a Show Cause Notice being served upon them, resulting in the challenged order dated 18.12.2014 confirming the demand.

Violation of natural justice principle:
During the hearing, the Appellant's counsel argued that the Department's calculation had no basis and no documents were considered. It was contended that the Appellant was not heard before the order was passed, violating the principle of natural justice "audi alteram partem." The Appellant's construction of universities during the period in question, not falling under commercial or industrial works, was highlighted. Reference was made to a Tribunal order and a High Court judgment to support the appeal for remand, requesting the Department to consider relevant documents before finalizing the demand.

Remand and redetermination of demand:
The Department, represented by the learned DR, stated that the Appellant did not respond to the Show Cause Notice nor participated in the proceedings despite opportunities given. The adjudicating authority proceeded ex parte due to the lack of response. However, it was emphasized that the Appellant should provide complete documents for the Department to reevaluate the demand. The Tribunal found that the Appellant not being heard violated the principles of natural justice, warranting a remand for readjudication. The Appellant's assurance to provide relevant documents for redetermining the demand was noted, and the Tribunal directed compliance with this requirement. The decision to remand the matter for a fair readjudication was deemed appropriate in the interest of justice.

In conclusion, the Appellate Tribunal CESTAT NEW DELHI set aside the impugned order, allowing the appeal by way of remand. The Appellant was directed to provide the necessary documents, and the Department was instructed to redetermine the demand based on the evidence presented. This decision aimed to ensure a fair process and uphold the principles of natural justice in the adjudication of the Service Tax dispute.