2025 (3) TMI 202 - AT - Service Tax

Scope of SCN - Appellant was registered under the category of Manpower Recruitment and Supply Agency Services but was simultaneously providing certain other services without intimating the Department - difference in figures of amounts reflected in ST-3 Returns vis- -vis those disclosed in P L A/c and Balance Sheet - Invocation of Extended period of limitation. Scope of SCN - HELD THAT - The SCN nowhere specified the nature of services on which service tax was sought to be recovered. Since the period covered by the SCN was prior to 01.07.2012 and the charge of service tax under Section 66 during that period was only on services defined under various clauses of clause (105) of Section 65 hence the SCN was clearly vague and not sustainable in law. While it is correct that the nature of other services were described in the adjudication order but the SCN being completely silent on the nature of services the deficiency in SCN cannot be removed by the adjudication order as SCN is the foundation of the case set up by the revenue and revenue cannot be permitted to travel beyond the scope of SCN as held in CCE vs. Shital International 2010 (10) TMI 19 - SUPREME COURT . Invocation of Extended period of limitation - HELD THAT - The demand is barred by limitation having been raised by invoking extended period of limitation. A perusal of the appeal records shows that the demand is worked out on the figures disclosed by the Appellant in its Balance Sheet and Profit Loss A/c. This Tribunal in catena of cases held that demand based on figures of Balance Sheet which is a public document cannot be made by invoking extended period of limitation. Since the SCN was issued on 20.09.2013 the demand of service tax beyond the period of eighteen months from 20.09.2013 i.e. till 20.03.2012 is in any case barred by limitation. However since the SCN lacks material particulars for raising the demand the demand for the period 20.03.2012 to 20.09.2013 cannot be sustained. Accordingly the demand of service tax of Rs.5, 11, 989/- along with interest and equal penalty under Section 78 are set-aside. Conclusion - The demand for service tax and penalties set aside due to limitations in the SCN and the lack of specificity regarding the nature of services. Appeal allowed.

Summary

The legal judgment issued by the Appellate Tribunal CESTAT ALLAHABAD addressed several key issues and considerations. The core legal questions examined in the judgment include the validity of the demand for service tax, the imposition of penalties under Sections 77 and 78 of the Finance Act, 1994, the sufficiency of the Show Cause Notice (SCN), and the application of the extended period of limitation.The Tribunal analyzed the case in detail, considering the relevant legal framework, precedents, evidence, and arguments presented by both parties. The key findings and conclusions of the Tribunal are as follows:1. The Tribunal noted that the SCN issued to the Appellant lacked specificity regarding the nature of services on which the service tax demand was based. As the charge of service tax during the relevant period was only applicable to services defined under specific clauses, the vague nature of the SCN rendered the demand unsustainable in law.2. The Tribunal emphasized that the demand for service tax was barred by limitation as it was raised by invoking the extended period of limitation. The Tribunal cited precedents to support the position that demands based on figures from public documents like Balance Sheets cannot be made under the extended period of limitation.3. Due to the deficiencies in the SCN and the lack of material particulars for raising the demand, the Tribunal set aside the demand for service tax of Rs.5,11,989/- along with interest and equal penalty under Section 78.4. The Tribunal also addressed the Appellant's arguments regarding the non-consideration of a payment of Rs.4,18,259/- and certain excess payments made. However, without relevant material being placed on record, the Tribunal could not provide specific directions on these issues.In conclusion, the Tribunal allowed the appeal of the Appellant, providing consequential relief. The judgment was pronounced on 04.03.2025, with the Tribunal setting aside the demand for service tax and penalties due to limitations in the SCN and the lack of specificity regarding the nature of services. The Appellant was granted relief based on these findings.