Service Tax Demand cannot be Confirmed without Mentioning in SCN: CESTAT Quashes Demand on Commercial or Industrial Construction Service [Read Order]

The Ahmedabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that service tax demand cannot be confirmed without mentioning in show cause notice (SCN) and quashed the demand on commercial or industrial construction service.

Goyal & Co Construction Pvt, the appellant challenged the impugned order which demanded the Service Tax amounting to Rs. 13,55,364/- was confirmed under Commercial or Industrial Construction Service (for the year 2005-06) and the demand of Rs. 57,068/- was confirmed under Renting of Immovable Property Services.

Shri Hardik Modh, Counsel appearing on behalf of the appellant submitted that the show cause notice has raised the demand, under the head of construction of residential complex services, whereas in the impugned order, the demand was confirmed under a different head i.e. Commercial or Industrial Construction Services.

The appellant has provided the construction service along with material, for this reason only in the show cause notice the demand was raised under Construction of Residential Complex. The service provided by the appellant falls under works contract service, on which the Service Tax was levied with effect from 01.06.2007. Accordingly, the demand for the period 2005-06 is not sustainable.

The show cause notice has proposed the demand of Service Tax under construction of residential complex. However, in the impugned order the demand was confirmed under Commercial or Industrial Construction Service. Thus, the impugned order has travelled beyond the scope of show cause notice. 

The two-member bench comprising Mr Ramesh Nair, Member (Judicial) and Mr C L Mahar, Member (Technical) viewed that the show cause notice cannot be rectified by way of Adjudication Order passed in such show cause notice, therefore, on this ground alone demand is not sustainable.

“Moreover, the period involved is 2005-06, even if it is assumed that the appellant had provided commercial or industrial construction service but undisputedly the service was provided along with material, therefore, it is falling under works contract Service. “, the bench held.

To Read the full text of the Order CLICK HERE

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