The Chennai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the service tax liability cannot be demanded on the show cause notice (SCN) which does not convey the exact nature of the alleged act or omissions on the part of the assessee.
T.M.P. Manoharan & Co, the appellant assessee was a registered service provider under maintenance and repair service, manpower recruitment service, and commercial or industrial construction service and also provided ‘erection, commissioning and maintenance’ services to Graphite India, Nasik and Siemens, Navi Mumbai.
The assessee appealed against the order passed by the Commissioner of Central Excise for confirming the service tax demand along with the imposition of penalties and interest against the assessee.
V. Ravindran, the counsel for the assessee contended that the Show Cause Notice was based on an audit and hence, there were no fresh facts or evidence to justify the issuance of the present Show Cause Notice and hence, the Show Cause Notice and adjudication order are therefore based very much on pre-existing facts.
N. Satyanarayanan, the counsel for the department relied on the decisions made by the lower authorities and contended that the issuance of show cause notice was as per the law and the demand raised by the revenue was legally sustainable.
The Bench observed that in the case of Commissioner of Central Excise and Service Tax, Pondicherry v. A.M. Manickam & ors, the court held that the Show Cause Notice being bereft of clarity, not conveying exact nature of the alleged act or omission, any demand arising therefrom was not sustainable.
The two-member bench comprising P Dinesh (Judicial) and Ajith Kumar (Technical) held that the demand was not legally sustainable and quashed the service tax demand against the assessee while allowing the appeal filed by the assessee.
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