2024 (6) TMI 1325 - AT - Service Tax

Nature of activity - manufacture or service - Business Auxiliary Service or not - manufacture of marble slabs/tiles by converting the marble blocks into slabs by sawing them and then subjecting them to the process of edge cutting crack filling and polishing - HELD THAT - A perusal of the order passed by the Assistant Commissioner shows that reliance has been placed upon a report dated 09.01.2017 submitted by the Range Officer regarding verification of certain documents including RG-I job work details ledger account from which the Range Officer concluded that there was no correlation between ER-3 returns and the documents submitted by the appellant. The order also mentions that the contention of the appellant that the amount received for job work was already included in the excisable turnover and duty had also been paid on the same was not justified. The contention of the learned counsel for the appellant is that the said report could not have been relied upon without providing a copy of the said report to the appellant - This contention of the learned counsel for the appellant seems to be justified. If the said report was to be relied upon it was incumbent upon the Assistant Commissioner to provide a copy of the report to the appellant. The impugned order dated 29.05.2018 passed by the Commissioner (Appeals) is accordingly set aside and the matter is remitted to the Commissioner (Appeals) to decide the appeal afresh - appeal allowed by way of remand.

Summary

Issues:
1. Quashing of order confirming demand of service tax, interest, and penalty under the Finance Act.
2. Classification of activities as 'Business Auxiliary Service' and liability to pay service tax.
3. Reliance on report without providing a copy to the appellant.
4. Opportunity to provide relevant documents to substantiate the contention.

Analysis:
1. The appellant, engaged in manufacturing marble slabs/tiles, contested the demand of service tax upheld by the Commissioner (Appeals). The appellant claimed exemption from service tax as the process falls under Chapter Heading 2515 of the Central Excise Tariff. However, a show cause notice was issued, alleging liability under 'Business Auxiliary Service' based on income details. The Commissioner (Appeals) found the appellant's activities as covered under Business Auxiliary Services and rejected the claim of exemption under Notification No. 25/2012.

2. The Commissioner (Appeals) noted that the appellant failed to establish inclusion of job work in the excisable turnover or payment of excise duty. Despite the appellant's argument that the process amounted to manufacture, the Commissioner held the appellant liable for service tax on job work. The appellant's counsel argued against the findings, emphasizing payment of central excise duty and exemption from service tax. The Assistant Commissioner's order relied on a report without providing a copy to the appellant, leading to a lack of opportunity for rebuttal.

3. The Tribunal observed that reliance on the report without sharing it with the appellant was unjustified. Acknowledging the potential manufacturing nature of the work, the Tribunal directed the appellant to submit relevant documents to substantiate their claim before the Commissioner (Appeals). The impugned order was set aside, and the matter was remitted for fresh consideration, ensuring the appellant's access to the Range Officer's report and an opportunity to present supporting documents.

4. The Tribunal allowed the appeal partially, emphasizing procedural fairness and the appellant's right to provide evidence supporting their position. The Commissioner (Appeals) was instructed to review the case afresh with the newly submitted documents, aiming for an expeditious resolution. The decision highlighted the importance of due process and the appellant's right to a fair hearing.

By addressing the issues raised and providing detailed analysis, the Tribunal ensured procedural fairness and an opportunity for the appellant to substantiate their claims effectively.