2018 (10) TMI 1326 - AT - Service Tax

Scope of SCN - Business Auxiliary Service or not - Trade Discount received from the media based on their turn over - whether the classification can be decided under a category which was not proposed in the SCN? - Held that - SCN proposed the classification of the service under Business Auxiliary Service whereas the adjudicating authority decided the classification and confirmed the demand under the head of advertisement agency service - It is settled law that the adjudication order cannot travel beyond the scope of SCN. Since the demand confirmed under category which was not proposed in the SCN such demand cannot be sustained - appeal allowed - decided in favor of appellant.

Summary

Issues:
Classification of service under Business Auxiliary Service, Scope of Show Cause Notice (SCN) and adjudication order, Correct classification under the law.

Analysis:
The case involved a dispute regarding the classification of services under Business Auxiliary Service (BAS) for service tax liability. The appellant received income in the form of 'Trade Discount' from media based on turnover, failing to discharge service tax liability amounting to ?6,55,703 under BAS. The original order classified the service under advertisement agency service, contrary to the SCN proposing BAS classification. The appellant contended that the adjudication order cannot go beyond the scope of the SCN, citing relevant case laws. The Assistant Commissioner representing the Revenue reiterated the findings of the impugned order.

The Tribunal, comprising Mr. Ramesh Nair and Mr. Raju, analyzed the submissions and records. They noted that the issue revolved around whether the classification could be altered beyond what was proposed in the SCN. The Tribunal emphasized that the adjudication order must align with the SCN and cannot introduce new classifications. Citing legal precedents, the Tribunal highlighted that the Commissioner (Appeals) erred in altering the classification to BAS, as he cannot disturb part of the order on his own. Consequently, the Tribunal concluded that since the demand was confirmed under a category not mentioned in the SCN, it could not be sustained. Therefore, they set aside the impugned order and allowed the appeal, ruling in favor of the appellant.

In conclusion, the judgment focused on the importance of adherence to the scope of the SCN in determining the classification of services for service tax liability. The Tribunal's decision highlighted the legal principle that the adjudication order cannot go beyond what was proposed in the SCN, ensuring procedural fairness and adherence to established legal norms.