The Ahmedabad Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that the Commissioner(Appeal) can’t go beyond the scope Show Cause Notice (SCN) demanding service tax under a different head other than in the SCN.
Uniform Enterprise, the appellant is engaged in providing service of painting job in the industrial sector which is covered under the category of ‘Industrial or Commercial Construction Service’ for levy of service tax as per the definition provided in Section 65(1) of the Finance Act, 1994.
On investigation conducted by the DGCEI, it was found that the appellant M/s. Uniform Enterprise was engaged in providing the service of industrial painting jobs which is covered under the category of ‘Industrial or Commercial Construction Service’ for levy of service tax.
Further found that the appellant has not paid the service tax on the taxable value received by them therefore, a show cause notice was issued to the appellant demanding the service tax of Rs. 11,25,541/- and proposing a demand of interest and penalties under Section 77 and 78 of the Finance Act, 1994 which was under the head of Industrial or Commercial Construction Service for the period 2006-07 to 2007-08. The Commissioner (Appeals) rejected the appeal filed by the appellant.
Shri S. Suriyanarayan, counsel appeared on behalf of the appellant stated that when in the show cause notice as well as the adjudication order, the demand was proposed and confirmed under Commercial or Industrial Construction, the Commissioner (appeals) has no right to change the classification proposed in the show cause notice.
Further contended that under the head of Management, maintenance and repair service, the service tax can be chargeable only when such service is under the contract or agreement whereas, in the present case there is no contract or agreement between the appellant and the service recipient for the reason that the service tax is otherwise not recoverable under the head of Management, maintenance or repair service. Shri Rajesh Agarwal, Superintendent (AR) appeared on behalf of the revenue and reiterates the finding of the impugned order.
It was evident that the show cause notice was issued demanding service tax under the head of Industrial or Commercial Construction Service and in the adjudication order also the service tax demand was confirmed under the same heading.
A two-member bench comprising of Mr Ramesh Nair and Mr C L Mahar observed that the Commissioner (Appeals) travelling beyond the show cause notice and adjudication order decided that the service tax is payable under the head of Management, maintenance and repair service is illegal and incorrect.
The Commissioner (Appeals) has no power to create a new case before him which is not flowing from the show cause notice. The CESTAT further held that the Commissioner (Appeals) shall decide the appeal considering the service under Industrial or Commercial Construction Service. While allowing the appeal, the Court set aside the impugned order and remanded the matter to the Commissioner (Appeals) for passing afresh Order-in-Appeal preferably within a period of two months.
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