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TMI Blog2022 (8) TMI 928X X X X Extracts X X X X X X X X Extracts X X X X ..... bothered to collect necessary documents from the respective government authorities at whose behest, the appellant is alleged to have under taken the works orders. The nature of such works alleged to have been under taken by the appellants, the taxability thereof under Finance Act, 1994 and exemption if any available was not discussed at all in the impugned order. The Department has not discharged its onus to prove that the appellant is liable to pay service tax. It is settled principle of law that unless and until the clear analysis of the activity done by the assessee is carried out, demand of service tax cannot be confirmed. It has been held in various cases that non adherence to the instructions issued regarding pre-show cause consultation vitiate the proceedings and further reason the impugned show cause notices and order are liable to be set aside - reliance can be placed in the case of AMADEUS INDIA PVT. LTD. VERSUS PRINCIPAL COMMISSIONER, CENTRAL EXCISE, SERVICE TAX AND CENTRAL TAX COMMISSIONERATE [ 2019 (5) TMI 669 - DELHI HIGH COURT] where it was held that In the present case, the Court is satisfied that it was necessary in terms of para 5.0 of the Master Circular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng on 15.10.2021 the appellant explained that all the works were executed for government departments and are in progress; all the work is exempt; related documents have already been submitted to the department. He submits that as can be seen from the works contracts and invoices the appellant provided the services to PWD authorities, Air Port Authority of India, Indian Railways and Oil India Ltd. in construction, erection, commissioning, installation, completion, fitting out, repairs, maintenance, renovation, or alteration of a road, bridge, tunnel or terminal for road transportation for use by general public; these works are exempt under entry no.13 (a)/12/12A/14 of exemption notification no.25/2012-S.T. dated 20.06.2012 4. Learned Chartered Accountant submits that the show cause notice is liable to be set aside being issued in violation of the instructions contend in Board s Circular 1053/02/2017-CX dated 10.03.2017 wherein a pre show cause notice consultation was mandated for show cause notice involving duty demand of Rs. 50 Lakhs and above. We further submits that the entire case was made out on one basis that the appellant failed to submit any invoice/running bills, workin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eet etc. Thereafter, the appellant was asked to submit the necessary details like work orders, invoices etc. No other investigations to prove that the appellants have rendered taxable service and received remuneration for the same, were conducted. The Department has not even bothered to collect necessary documents from the respective government authorities at whose behest, the appellant is alleged to have under taken the works orders. The nature of such works alleged to have been under taken by the appellants, the taxability thereof under Finance Act, 1994 and exemption if any available was not discussed at all in the impugned order. The appellants contentions that the works under taken by them were on behalf of the government department and for use of general public and that the same are exempt vide notification no.25/2012 S.T. dated 28.06.2012 were not at all considered and discussed. Under the circumstance we hold that the Department has not discharged its onus to prove that the appellant is liable to pay service tax. It is settled principle of law that unless and until the clear analysis of the activity done by the assessee is carried out, demand of service tax cannot be confir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat even when the payments were not made by the clients but the clients booked the expenditure in their books of account they were required to pay the related tax deducted at source to the exchequer and issue a certificate of TDS and incorporate the same in the return called 26AS filed with the Income Tax Authorities and such information cannot be the basis for arrival of the consideration received by the service provider. He has submitted that both the Show Cause Notices were issued without examining the books of account maintained by M/s. Sharma and were issued on the basis of presumptions about the consideration received by M/s. Sharma. The considerations taken into account for issue of Show Cause Notices was in no way near to the actual consideration received by M/s. Sharma during the relevant period which should be the basis for arriving at the assessable value. He has stated that they had elaborated before the Original Authority various reasons for discrepancies in the figures arrived at presuming the considerations received by M/s. Sharma on the basis of such TDS Certificates and the figures in the returns. He has further relied upon this Tribunal s Final Order in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s very clear that none of the records of appellant were taken into consideration for framing of charges that appellant had short paid service tax to the tune of around Rs.8 crores and the said charges were framed only on the basis of information in the form 26AS. We further note that the audit report as explained by the Chartered Accountant for appellant found that Cenvat credit to the tune of Rs.6,38,024/- was inadmissible to the appellant out of total Cenvat credit of Rs.2,21,35,916/- whereas the learned Original Authority has disallowed the same only on the basis that original documents were not produced before him. We accept the claim by the appellant that original documents were seen by the audit party visited by the appellant and such evidence was not taken into consideration by the Original Authority. The learned Original Authority was required to follow the principles of natural justice and direct the appellant to produce the original documents on the basis of which Cenvat credit was availed by the appellant, in case he had doubt about the availability of original documents with the appellant. The order of Original Authority presuming that the appellant did ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in the following cases it has been held that non adherence to the instructions issued regarding pre-show cause consultation vitiate the proceedings and further reason the impugned show cause notices and order are liable to be set aside. (i) Hitachi Power Europe GMBH 2019 (27) GSTL 12 (MAD) (ii) Amadeus India Pvt. Ltd. 2019 (25) GSTL 486 (DEL) (iii) Gujarat High Court Order in special civil application No. 11308 of 2019; 11208/2019 along with civil application (for direction) NO.1 of 2020. In the case of L T Hydrocarbon Engineering Ltd. 8.2 Hon ble High Court of Madras held in the case of Hitachi Power Europe GMBH (supra) held that 2. I have had occasion to deal with a similar issue in W.P. No. 1618 of 2019 in the case of Freight Systems India (Pvt.) Limited (Order dated 28-2-2019) wherein I have held as follows : 8. The tenor of the Circulars/Instructions makes it clear that the introduction of the consultation process is as a measure to avoiding litigation. I refer to the Circulars/Instructions in some detail, since it is necessary to understand the purpose for which the process has been introduced. 9. In its Instructions dated 21-12-20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te and adjudicating authority/Commissione-rate are different, pre-show cause notice consultation with the assessee concerned shall be done by the Commissioner of show cause notice issuing authority/commissionerate. 4.0 In cases where the SCN issuing authority is from the Executive Commissionerate, the pre-SCN consultation shall be done by the concerned Commissioner. 5.0 All cases of pre-SCN consultation which leads to closure of case without issuing of SCN, either in part or whole, the file shall be submitted to the relevant reviewing authority for case of such nature to keep the reviewing authority informed of the decision. 12. Master Circular No. 1053/02/2017-CX, dated 10-3-2017, deals with the subject of consultation process at paragraph 5 in the following terms :- 5.0 Consultation with the notice before issue of show cause notice : Board has made pre-show cause notice consultation by the Principal Commissioner/Commissioner prior to issue of show cause notice in cases involving demands of duty above Rs. 50 lakhs (except for preventive/offence related SCN s) mandatory vide instruction issued from F. No. 1080/09/DLA/MISC/15, dated 21st December, 2015. Suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or confer. 3. International law. The interactive methods by which States seek to prevent or resolve disputes. 18. The obvious inference is that the consultation has to be between the assessee and the officer and prior to the stage of issuance of show cause notice. In fine, I conclude that the consultative process as envisaged by the Department mandates an opportunity of personal hearing with the assessee, face to face, in order to make the process an effective one. The petitioner, in this case, has been denied this opportunity. 11. The discussions as above as well as the observations above apply on all fours to the present case, except that no opportunity was sought in that case for a personal hearing whereas, in the present case, the petitioner has sought an opportunity of personal hearing that has admittedly not been granted. 12. In addition, Learned Counsel also points to M.F. (D.R.) Office Memorandum F. No. 296/51/2016-CX.9, dated 8-3- 2016 wherein the Department monitors and reports upon the implementations of the Tax Administration Reforms Commission (TARC) that was set up exclusively to review the application of Tax policies and Tax laws in the context o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view of the Court neither of the exceptions specified in para 5.0 were attracted in the present case. 5. Accordingly, without expressing any view on the merits of the case of either party in relation to the issues raised in the impugned SCN, the Court sets aside the impugned SCN dated 4th September, 2018 and relegates the parties to the stage prior to issuance of impugned SCN. The Respondent will now fix a date on which the authorised representative of the Petitioner would be heard in relation to the issues highlighted in the submissions dated 24th August, 2018 of the Petitioner in response to the communication dated 20th August, 2018 addressed to it by the Respondent. Needless to state that the Petitioner will extend its full cooperation to the Respondent by providing the necessary information. 9. In view of the above, we find that the show cause notice was issued in violation of instruction issued by CBIC as referred above as observed by the various High Courts the instructions are mandatory in the instant case also the instruction were not complied with. We find that Departmental instructions are binding on the departmental officers. Therefore, any action taken in vio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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