2025 (7) TMI 927 - AT - Service Tax

Competence to travel beyond SCN - Management Maintenance and Repair services or Commercial or Industrial Constructions Services - suppression of material facts - extended period of limitation - HELD THAT - The show cause notice in the present case was issued under the category of Management Maintenance and Repair services as defined under Clause 65(64) of the Finance Act. 1994 whereas in the impugned order the demand has been confirmed under the category of Commercial or Industrial Constructions Services as defined under 65(25b) of the Act. It is also found that it is a settled law that the Revenue cannot travel beyond the show cause notice and in the present case demand has been confirmed under the category of Commercial or Industrial Constructions Services for which show cause notice was not given. Hence the confirmation of demand under commercial or industrial construction service is not sustainable. Appeal allowed.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Tribunal were:

- Whether the demand of service tax confirmed under the category of 'Commercial or Industrial Constructions Services' (Clause 65(25b) of the Finance Act, 1994) is sustainable when the original show cause notice was issued under the category of 'Management, Maintenance and Repair Services' (Clause 65(64) of the Finance Act, 1994).

- Whether the Revenue authority is competent to confirm service tax demand under a category different from that mentioned in the show cause notice.

- Whether the extended period of limitation could be invoked on the ground of suppression of facts by the appellant, given that a substantial portion of the demand was dropped and the appellant had a bona fide belief regarding non-liability.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Competency of Revenue to Confirm Demand under a Different Category than the Show Cause Notice

Relevant Legal Framework and Precedents: The Finance Act, 1994, defines various taxable services under different clauses, including Clause 65(64) for 'Management, Maintenance and Repair Services' and Clause 65(25b) for 'Commercial or Industrial Constructions Services'. It is a settled legal principle that a show cause notice must specify the grounds and category under which demand is raised, and the adjudicating authority cannot travel beyond the scope of the notice to confirm demand under a different category.

Court's Interpretation and Reasoning: The Tribunal noted that the show cause notice was issued strictly under the category of 'Management, Maintenance and Repair Services'. However, the Commissioner (Appeals) confirmed the demand under the category of 'Commercial or Industrial Constructions Services', which was not mentioned in the show cause notice. The Tribunal emphasized the settled law that the Revenue cannot go beyond the scope of the show cause notice. Confirming the demand under a different category without issuing a fresh notice or amending the original one is impermissible.

Key Evidence and Findings: The record showed the original show cause notice dated 24.10.2008 invoked Clause 65(64), but the impugned order confirmed the demand under Clause 65(25b). No amendment or fresh notice was issued to inform the appellant of this change.

Application of Law to Facts: Since the demand was confirmed under a category not specified in the show cause notice, the confirmation was held to be legally unsustainable.

Treatment of Competing Arguments: The appellant argued that the confirmation under a different category was beyond the authority's jurisdiction and thus invalid. The Revenue contended the correctness of the impugned order but did not dispute the category mismatch. The Tribunal sided with the appellant, reinforcing the principle of jurisdictional limitation tied to the show cause notice.

Conclusions: The Tribunal set aside the impugned order confirming the demand under the 'Commercial or Industrial Constructions Services' category, holding it unsustainable due to the lack of proper notice.

Issue 2: Invocation of Extended Period of Limitation on Grounds of Suppression

Relevant Legal Framework and Precedents: Under service tax law, the extended period of limitation can be invoked if there is suppression of material facts or fraud by the assessee. However, bona fide belief and partial acceptance of demand may negate the applicability of extended limitation.

Court's Interpretation and Reasoning: The Tribunal observed that a substantial portion of the service tax demand was dropped by the original authority, and the appellant had a bona fide belief that service tax was not payable on the alleged services. There was no evidence of suppression or deliberate concealment of facts by the appellant.

Key Evidence and Findings: The appellant's reply to the show cause notice and the partial dropping of demand by the original authority supported the contention of bona fide belief and absence of suppression.

Application of Law to Facts: Since there was no suppression of facts, the extended period of limitation was not invocable.

Treatment of Competing Arguments: The Revenue maintained the extended period was applicable due to alleged suppression, but failed to substantiate this with evidence. The Tribunal found the appellant's position more convincing.

Conclusions: The invocation of extended limitation period was not justified in the present case.

3. SIGNIFICANT HOLDINGS

"It is a settled law that the Revenue cannot travel beyond the show cause notice and in the present case, demand has been confirmed under the category of 'Commercial or Industrial Constructions Services' for which show cause notice was not given. Hence, the confirmation of demand under commercial or industrial construction service is not sustainable."

Core principles established include:

• The Revenue authority must confine itself to the category of service specified in the show cause notice when confirming service tax demands.
• Confirmation of demand under a category not mentioned in the show cause notice is invalid and unsustainable.
• Extended period of limitation cannot be invoked without evidence of suppression or fraud; bona fide belief and partial acceptance of demand negate such invocation.

Final determinations:

• The impugned order confirming service tax demand under 'Commercial or Industrial Constructions Services' was set aside.
• The appeal was allowed with consequential relief to the appellant.
• The extended period of limitation was held inapplicable due to absence of suppression.