SCN Deemed Invalid Without Mentioning Specific Category under which Demand is Made: CESTAT [Read Order]

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chandigarh has held that the Show Cause Notice (SCN) issued by the Commissioner of Central Excise & Service Tax without mentioning the specific category under which the demand was made is deemed invalid.

The verdict was passed in an appeal filed by M/s. Confederation of Indian Industry against the order of the Commissioner confirming the demand of service tax and imposing penalties.

The Commissioner had raised a demand of service tax amounting to Rs. 2,30,78,277/- under Section 73(1) of the Finance Act, 1994 along with interest and penalties for certain services provided by the appellant.

The appellant, represented by Shri Rajesh Kumar argued that the SCN lacked clarity with respect to the specific category under which the demand was made and due to this reason, they were not able to file a fruitful reply against the same.

The appellant, M/s. Confederation of Indian Industry was engaged in providing various services specified under Section 65(105) of the Finance Act, 1994.

The respondent revenue, Commissioner of Central Excise & Service Tax, represented by Ms. Shivani reiterated the findings.

The bench observed that the SCNs issued to the appellant lacked specificity and clarity and it failed to mention the specific category under which the demand was made, rendering the demand vague and non-actionable.

It was also observed that this lack of clarity made it difficult for the appellant to provide a detailed and effective reply/response to the allegations raised in the SCN.

The CESTAT cited several judgements, including decisions by the Supreme Court, that emphasized the importance of specific and clear SCNs to ensure that the recipient has a fair opportunity to defend against the charges.

Furthermore, the bench also noted that the demand for service tax was raised beyond the statutory limitation period. The appellant had a bonafide belief that they were not liable to pay service tax and the department was well aware of their working and compliance with tax regulations.

The bench thus held that invoking the extended period of limitation was deemed unjustified.

In result, the two-member bench consisting of Mr. S. S. Garg (Judicial Member) and Mr. P. Anjani Kumar (Technical Member) invalidated the penalties imposed on the appellant and allowed the appeal setting aside the order passed by the Commissioner of Central Excise & Service Tax, Chandigarh.

This judgement by CESTAT highlights the importance of clear and specific details to be mentioned in the SCN with respect to the category under which the demand was made thus enabling the taxpayers to provide a fruitful and effective reply/response to the allegations and thus ensure a fair opportunity of being heard.

To Read the full text of the Order CLICK HERE

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