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2019 (8) TMI 320 - AT - Service TaxValidity of SCN - Business Auxiliary Services - evasion of payment of service tax - case of appellant is that SCN is vague and apart from indicating the amount under various heads of miscellaneous income on technical fee , technical knowhow , commission and income from seminar , it does not mention as to why the said services would fall under BAS - HELD THAT - When the Show Cause Notice, which is the foundation on which the department has to build up its case, is vague and lack details, it has to be held that the impugned order based on such a Show Cause Notice is bad in law and cannot be sustained. In COMMISSIONER OF C. EX., BANGALORE VERSUS BRINDAVAN BEVERAGES (P) LTD. 2007 (6) TMI 4 - SUPREME COURT , the Supreme Court observed that the Show Cause Notice is the foundation on which the department has to build up its case and if the allegations in the Show Cause Notice are not specific and on the contrary are vague and lack details, it would be sufficient to hold that the noticee was not given proper opportunity to meet the allegations. The Madras High Court in THE COMMISSIONER OF CENTRAL EXCISE VERSUS M/S INDIAN OIL CORPORATION, CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL 2017 (6) TMI 573 - MADRAS HIGH COURT also observed that the Show Cause Notice has to give material particulars since it is the very basis and foundation for the proceedings initiated by the department. Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Vagueness of the Show Cause Notice. 2. Classification of services under "Business Auxiliary Service" (BAS). 3. Liability for Service Tax on various incomes. Issue-wise Detailed Analysis: 1. Vagueness of the Show Cause Notice: The appellant contended that the Show Cause Notice (SCN) was vague and failed to specify the sub-clauses of Section 65(19) under which the services provided were liable to Service Tax. The SCN did not disclose reasons why the activities undertaken by the appellant were covered under BAS. The appellant relied on several judicial decisions to support this contention, emphasizing that the burden of proof lies on the Revenue to establish the activities covered under BAS. The Tribunal noted that the SCN merely mentioned that the appellant evaded payment of Service Tax on BAS without indicating the nature of the business activities carried out by the appellant. The Tribunal highlighted that the SCN did not mention any particular clause of the BAS definition, thus making it vague and lacking in necessary details. 2. Classification of Services under "Business Auxiliary Service" (BAS): The SCN alleged that the appellant was engaged in providing "Business Auxiliary Service" in addition to "transport of goods by road." The SCN listed various incomes such as "Miscellaneous income on technical fee," "Technical Knowhow," commission from M/s. Toyota Tsusho Corporation, Japan, and income from seminars, all of which were classified under BAS. However, the SCN did not specify which sub-clause of Section 65(19) these services fell under. The Tribunal emphasized that BAS includes services related to promotion or marketing of goods/services, customer care, procurement of goods/services, production or processing of goods, provision of service on behalf of the client, and services incidental or auxiliary to these activities. The Tribunal found that the SCN failed to indicate the specific nature of services referred to in any of these clauses. 3. Liability for Service Tax on Various Incomes: The SCN demanded Service Tax on several heads of income: - "Miscellaneous income on technical fee" for the years 2004-05 to 2006-07. - Amounts paid for "Technical Knowhow" service to foreign concerns, which were alleged to fall under BAS. - Amounts received from recipients of "Technical Knowhow." - Commission received from M/s. Toyota Tsusho Corporation, Japan for marketing their goods in India. - Income from seminars for training provided. The appellant argued that the SCN did not provide reasons why these amounts were covered under BAS. The Tribunal observed that the SCN merely listed the amounts without explaining why they would fall under BAS. The Tribunal noted that the adjudicating authority and the Commissioner(Appeals) did not adequately address the appellant's objections regarding the SCN's vagueness and the lack of specific findings on why the demand for Service Tax was justified. Conclusion: The Tribunal concluded that the SCN, being the foundation of the department's case, was vague and lacked necessary details. Citing precedents, the Tribunal held that such vagueness in the SCN deprived the appellant of a proper opportunity to meet the allegations. Consequently, the impugned order based on the vague SCN was deemed bad in law and unsustainable. The Tribunal set aside the order dated 13 April 2011 passed by the Commissioner(Appeals) and allowed the appeal.
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