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2023 (3) TMI 298 - AT - Service TaxNon-payment of Service Tax - Site Formation Service - Cargo Handling Service - Commercial or Industrial Construction Service provided to various clients - period from July 2008 to December 2008. Non-reliance of documents in support to propose tax liability - principles of audi alteram partem violated (natural justice) - HELD THAT:- There is no dispute that a Show Cause Notice is the foundation on which the Revenue would build its case and hence, it is quintessential that a Show Cause Notice should reflect all such supporting evidences in support of each proposal for demand of respective duty / tax - there is no dispute even by the representative of the Revenue that nowhere in the Show Cause Notice is it mentioned as to the relied upon documents nor is there any averment about supplying such relied upon documents to the noticee. Further, it is also clear from a perusal of the Show Cause Notice that it has been alleged that the appellant provided the services mentioned thereunder, that they did not pay the Service Tax on those services and that the verification carried out by the audit party warranted the invocation of extended period for demanding the tax due. Thus, it is very clear from the Show Cause Notice that there is not even a single assertion proposing to levy and collect Service Tax on the basis of any specific document / evidence. From the discussions in the impugned Order-in-Original, it is found that it was the appellant who furnished most of the documents voluntarily, though no mention about any of the documents finds place in the Show Cause Notice. It is these very documents that were sent for verification to the jurisdictional Service Tax authority and hence, it would be incumbent upon the lower authority to have provided such report obtained from the jurisdictional Service Tax authority before fastening the appellant with tax liability - the liability was fastened on the appellant without following the principles of audi alteram partem and clearly, the consequential demands raised cannot sustain. Site Formation Services for which the appellant has relied on exemption Notification No. 17/2005-S.T. dated 07.06.2005 - HELD THAT:- The exemption has been granted for site formation and clearance, excavation and earth moving and demolition and such other similar activities referred to in sub-clause (zzza) of clause (105) of Section 65 of the Finance Act, provided to any person by any other person in the course of construction of roads, airports, railways, etc., which Notification was interpreted by the co-ordinate Chandigarh Bench of the CESTAT in the case of M/s. Ludhiana Builders [2019 (10) TMI 1327 - CESTAT CHANDIGARH] wherein the Learned Bench has held that Notification No. 17/2005-S.T., dated 7-6-2005 does not say that if it is not a public road then it is liable to be taxed. Therefore, we hold that the appellant is engaged in the construction of road and the same is exempt as per the Notification No. 17/2005-S.T., dated 7-6-2005, therefore, no service tax is payable by the appellant - Thus, the appellant is well within its right to claim bona fides as to the non-payment of Service Tax. Demand pertaining to Cargo Handling Services - HELD THAT:- If the Adjudicating Authority had any doubts that the appellant did undertake any other activity other than transportation inviting tax liability, then the same should have been put across to the appellant for rebuttal / explanation thereby providing an opportunity to the appellant to meet the allegations levelled against it. Contrary to this, the Adjudicating Authority refers the matter to the jurisdictional tax authority, obtains a report and proceeds to confirm the demand based solely on such report obtained behind the back of the appellant. Moreover, the name of the party as mentioned at Annexure-II to the Show Cause Notice refers to ICL and HCC whereas in the Order-in-Original, the lower authority has referred to ICL and ACC, which was perhaps based on the unrebutted report obtained by the lower authority - it is found that there are serious inconsistencies, that the conclusion arrived at by the Adjudicating Authority appears to be in a haste and without proper application of mind and also that the principles of natural justice have not been followed. Construction services rendered to M/s. Petron Civil Engineering (P) Ltd., against which it was claimed by the appellant that the principal contractor had paid the Service Tax, which fact has been brushed aside by the lower authority by relying upon the Master Circular No. Circular No. 96/7/2007-S.T. dated 23.08.2007 - HELD THAT:- There are substance in the contentions of the Learned Advocate for the appellant that the said Circular can operate only prospectively, as clarified by the Hon’ble Supreme Court in the case of M/s. Suchitra Components Ltd. [2007 (1) TMI 4 - SUPREME COURT] wherein the Hon’ble Court held that when the circular is against, the assessee, they have right to claim enforcement of the same prospectively. Denial of CENVAT Credit on capital goods which has been denied on the ground that the noticee did not turn up with documents for verification by the jurisdictional Service Tax authority - HELD THAT:- It is the settled position of law that no CENVAT Credit shall be allowed on capital goods used exclusively in the manufacture of exempted goods or in providing exempted services; but from a perusal of the Show Cause Notice or the impugned Order-in-Original, nowhere it is seen that the lower authority has placed reliance on any evidence to support that the appellant was indeed engaged in the manufacture of exempted goods or was providing exempted services. Even on merits, the demands proposed in the Show Cause Notice, which thereafter have been confirmed in the impugned Order-in-Original, are without any basis or without any documentary evidence and that there is serious violation to the principles of natural justice and hence, no part of the demand can be sustained. Appeal allowed.
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