By Puloma Dalal, Jayesh Gogri, Mandar Telang, Chartered Accountants
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Where the Show Cause Notices were issued on the basis of an unreasoned prima facie assumption, they were held invalid and thus, also the adjudicating orders based on such notices.
Facts:
The department issued two Show Cause Notices for the period April 2008 to March 2011. The department just reproduced the provisions of section 65(19) relating to definition of “Business Auxiliary Services” and demanded tax along with interest and penalty without stating any reasons and on a prima facie assumption.
The appellant, apart from impeaching the adjudication order on merits, urged a preliminary ground of challenge that the Show Cause Notices were incoherent and since it did not spell out what relevant ingredients of the relevant statutory provision applied to the service so provided to warrant attribution of the liability, the initial step for initiation of proceedings leading to adjudication failed for violation of due process and transgression of principles of natural justice. Reliance was placed on United Telecom Ltd. vs. CST, Hyderabad 2011 (22) STR 571 (Tri.-Bang), Kaur & Singh vs. CCE 1997 (4) ELT 289 (SC) and M L Capoor & Others AIR 1974 SC 87 (para 10).
Held:
On analysis of the Show Cause Notices issued by the department, the Hon. Tribunal observed that since the said notices were issued on the basis of unspecified reasons and a prima facie assumption that the assessee was assessable to levy of service tax for providing Business Auxiliary Services and that mere extraction of the entire provisions of section 65(19) of the Act did not fulfill the requirement, they were invalid and that the infirmity was incurable. The Hon. Tribunal, further, quashed the adjudication orders being the consequence of the invalid Show Cause Notices and granted liberty to the revenue to act in accordance with law.
