2024 (12) TMI 1242 - AT - Service Tax

Violation of principles of natural justice - Submissions made in the miscellaneous application were not raised before the authorities below - requirement to consider the additional grounds raised now - ​​​​​​Liability of corporate body to discharge the service tax liability on legal services availed by engaging advocates and paid legal fees for the period from 1.7.2012 - Reverse Charge Mechanism - Submissions made in the miscellaneous application were not raised before the authorities below. HELD THAT - From the order of the Adjudicating Authority, it is found that the appellant was represented by Shri P. Kulasekaran, Ld. Advocate who attended the personal hearing on 13.01.2022 and he reiterated that the decision be taken based on the decision of the Delhi High Court judgement in the case of DELHI TAX BAR ASSOCIATION AND ANOTHER VERSUS UNION OF INDIA 2013 (4) TMI 77 - DELHI HIGH COURT . No other submission was made by the Ld. Counsel for the appellant and accordingly, the order confirming the demand was passed. The appellant challenged the said order and filed the appeal on 01.4.2022, however, when the appeal was listed for hearing none appeared on behalf of the appellant instead a letter was submitted whereby they agreed to discharge the service tax liability and also deposited the aggregate amount towards the confirmed demand and penalties. In view of the stand taken by the appellant before the Adjudicating Authority as well as before the Commissioner (Appeals), it is evident that they had virtually accepted the service tax liability. All the referred submissions which are now being sought to be made in the miscellaneous application were not raised before the authorities below and hence there is no finding on them. The appellant accepts that they are certainly in the nature of new grounds, however since they are purely questions of law, there is no bar in considering the same. However, it is opined that though the issue now being raised are purely on legal grounds yet the department should get enough opportunity to place on record the submissions in support thereof and contest the same. As noticed earlier, the matter before the authorities below has proceeded at the behest of the appellant on the footing that the matter was covered by the decision of the Delhi High Court in DELHI TAX BAR ASSOCIATION AND ANOTHER VERSUS UNION OF INDIA 2013 (4) TMI 77 - DELHI HIGH COURT and accordingly, the appellant has accepted its liability towards service tax in writing and thereafter discharged the said liability by depositing the amount towards the confirmed demand. Conclusion - Keeping in view the principles of natural justice which equally applies in favour of the department, in the interest of justice it would be fair to remand the matter to the Adjudicating Authority to consider the additional grounds which the appellant has raised now and record the findings thereof - the matter is remanded to the Adjudicating Authority to consider afresh on merits - appeal allowed by way of remand.

Summary

Issues:
1. Liability of a corporate entity to pay service tax under Reverse Charge Mechanism for legal services.
2. Jurisdictional issues regarding Show Cause Notices and competence of the Adjudicating Authority.
3. Grounds raised in a miscellaneous application not considered by lower authorities.

Analysis:

Issue 1: Liability of a corporate entity to pay service tax under Reverse Charge Mechanism for legal services:
The appellant, a telecommunication service provider, engaged in legal services without paying service tax under Reverse Charge Mechanism. The Adjudicating Authority confirmed a demand for service tax along with interest and penalties. The appellant initially challenged the order but later agreed to discharge the liability and paid the amount. However, new legal grounds were raised before the Tribunal, which were not considered by lower authorities. The Tribunal remanded the matter to the Adjudicating Authority for fresh consideration, allowing both parties to present their case.

Issue 2: Jurisdictional issues regarding Show Cause Notices and competence of the Adjudicating Authority:
The appellant raised jurisdictional issues regarding the Show Cause Notices issued by different authorities and the competence of the Superintendent to adjudicate. The appellant argued that the Superintendent lacked authority to decide cases involving taxability, classification, valuation, and extended limitation periods. The appellant also contended that the Adjudicating Authority was not appointed as a common authority to adjudicate multiple Show Cause Notices. These issues were not addressed by lower authorities, leading to a remand for further consideration.

Issue 3: Grounds raised in a miscellaneous application not considered by lower authorities:
The appellant submitted a miscellaneous application raising new legal grounds, including lack of jurisdiction for issuing Show Cause Notices, incompetence of the Superintendent to adjudicate, and the absence of a common Adjudicating Authority appointment. These grounds were not considered by lower authorities. The Tribunal acknowledged the new grounds as questions of law but emphasized the need for the department to contest them. In the interest of natural justice, the matter was remanded to the Adjudicating Authority for a fresh assessment considering the additional grounds raised by the appellant.

In conclusion, the Tribunal set aside the impugned order and remanded the matter to the Adjudicating Authority for a fresh review. Both parties were given the opportunity to present their case, and the Adjudicating Authority was directed to decide the matter in accordance with the law. The appeal was allowed by way of remand.