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M/s. Thirumurugan Enterprises Versus The Customs, Excise & Service Tax Appellate Tribunal, The Commissioner of Central Excise

Vagueness of show cause - non-specification of classification/category of services in the show cause notice - nature of receipt - Held that:- A careful perusal of the orders of the adjudicating authority, the Commissioner (Appeals) as also the Tribunal would reveal that the Commissioner (Appeals) has decided the issues on two aspects, viz., one on the vagueness of the show cause notices stating that it is bereft of details and being without clarity and the other on the plea of limitation. The Tr .....

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notices were challenged on the very foundation that they are vague and without particulars as to classification of works that attracts service tax. - Matter remanded back - Decided in favour of assessee. - C.M.A. NOS. 764 TO 788 OF 2015, M.P. NOS. 1 OF 2015, CM.A. NO. 764 OF 2015 - Dated:- 30-4-2015 - The Honourable Mr. Justice R. Sudhakar And The Honourable Ms. Justice K. B. K. Vasuki,JJ. For the Appellants : Mr. K. Jayachandran For the Respondents : Mr. V. Sundareswaran JUDGMENT (Delivered By .....

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st respondent Tribunal is justified in ignoring the decisions of the co-ordinate Bench reported in 2009 (13) STR 542, 2011 (22) STR 571 for the legal issue that "non-specification" of classification/category of services in the show cause notice and in the adjudication order would be fatal to the proceedings? iii) Whether the 1st respondent Tribunal is justified in ignoring the decision of the Hon'ble Madras High Court reported in 2011 (23) STR 7 (Mad), wherein it was held that Tax .....

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re as hereunder :- The appellants/assessees herein are contractors, who carried out various activities for the Neyveli Lignite Corporation (for short 'NLC'), a Government of India Undertaking. The respondent/Department found that the activities, undertaken by the assessees/appellants, come within the purview of service tax and, therefore, they are liable to pay service tax. 4. Accordingly, the appellants/assessees were visited with show cause notices. It further appears that subsequent t .....

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sidered the prima facie case pleaded by the appellants on the following grounds :- "(1) that the show cause notices did neither propose the classification of taxable service(s) for which the service tax was demanded from the appellants nor specify the classification of services allegedly rendered by the appellants; (2) that the corresponding Orders-in-Original have also not specified the classification of the taxable services, against which the demands of service tax have been confirmed; (3 .....

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d from NLC by such appellants, should not have been confirmed in the orders-in-original; (5) that the Ld. Commissioner of Central Excise, Puducherry, vide his Orders-in-Original Nos.82 and 89 dated 29.12.2009 (relied upon in all the appeals) dropped the proceedings in both the cases only on the ground of "non-specification" of classification of services, in the notices. The legal position in this regard is also settled in favour of the appellants as per the following order of the Hon&# .....

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hted, as evident from identical findings of adjudicating authority in a number of impugned orders; (7) that the demands have been made without any verification, or inquiry or investigation as to the nature of works carried out by the appellants with reference to the various contracts signed with NLC. It is submitted that no statements were recorded from either the appellants or the authorities of NLC in this regard; (8) that the fact of payment of VAT by the appellants have also been ignored. Mo .....

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lants cannot be a valid ground for sustaining the demands. A number of decisions of Hon'ble CESTAT, confirm this settled legal position, e.g., 2011 (21) STR 119 (Tr. Del.) in the case of Jetlite (India) Ltd., - Vs - CCE, New Delhi; (10) that the impugned orders, in certain cases, waived penalties, in other cases imposed penalties. The adjudicating authorities did not appreciate the facts in the first place. Despite admission of the circumstances as being similar in all cases and when NLC its .....

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ble service and which services provided fall under non-taxable service. The Commissioner (Appeals) accepted the plea of the appellants/assessees both on vagueness of show cause notice and also on the plea of limitation and set aside the order of adjudication. For better clarity, the relevant portion of the order of the Commissioner (Appeals) is extracted hereinbelow :- "6.1 I find that in the impugned SCNs issued by the department there were no allegation as regards to the category under wh .....

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k of clarity in appeal - SCN proposed demand based on figures in balance sheet under Head 'Commission/Discount/Inventive' without investigating true nature of service and its taxability - SCN deals with barter agreement but same not enclosed in appeal paper - Nature of service rendered not clear - Appeal not filed with clarity as to what should be taxable value - Assessable value doubted - No willingness on part of department to quantify extent of undervaluation or under-declaration - No .....

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g of tower parts done through engagement of employees/workers of company not amounts to providing manpower recruitment and supply service - SCN not making any head or tail of Revenue's case - Audit objections not bring out supply of manpower - SCN not providing foundation for levy in respect of activity carried out - Charge with a basis not noticed in SCN - Revenue's appeal dismissed - Section 73 of Finance Act, 1994." (para 3). 6.4Further the Hon'b;e Supreme Court in the case o .....

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in the instant case the impugned SCNs do not contain the details like the category of services under which the service tax liability would fall; that the nature of activities carried out by the appellants and whether such activities could be classified under specific categories of services and applicability of relevant provisions to the said category. As rightly held by the Apex Court, SCN is foundation on which the Department has to build up its case. In the absence of specific allegations, the .....

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ervice(s). In this connection it is pertinent to point out that Hon'ble CESTAT in the case of Hi-Cons Building Products - Vs - Commr. of C.Ex. & Cus. & S.T., Cochin, reported in 2011 (23) STR 366 (Tri. Bang) has held as follows :- "Order - Non-speaking order - Show cause notice classifying activity under Commercial or Industrial Construction Service - Adjudication order containing different conclusion that Erection, Commissioning and Installation service besides construction ser .....

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power under fiscal statute while passing order bringing someone under tax net, required to render specific finding as to liability - Demand cannot be on surmises and conjectures - Section 73 of finance Act, 1994." (Para 12). 8.0. I also find that all the SCNs are time barred inasmuch as the department had been aware that the appellants had been rendering services to M/s.NLC from the year 2002 onwards. This being so the appellants cannot be fastened with duty liability invoking proviso to S .....

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he must have done does not render it suppression of fact". In view of the Apex Court's decision, since the facts was known to the Department, the extended time limit is not available to the department and the issue is totally time barred. Further it is a settled law that when interpretations of the provisions involved, extended period is not invokable. 9. To conclude that the department's cases fall flat both on merit as well as on time bar aspect. 10. In view of the facts, case law .....

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r plea on all the issues that were considered by the Commissioner (Appeals), which includes the plea of limitation as well, which has been recorded by the Tribunal in para-5 of its order. The relevant portion of the order of the Tribunal is extracted hereinbelow for better appreciation :- "(f) The Department was aware of the activities of the assessees right from 2002 and there were meetings of senior level officers of the Department, including the Commissioner of Central Excise, Puducherry .....

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ivity of assessees under one or more of the taxable services. (h) The Department did not follow any of the legal procedures prescribed under Section 14 of Central Excise Act, 1944 (summon procedure to collect information) read with Section 83 of the Finance Act, 1994 or under Section 72 of the Finance Act, 1994 (Best Judgment assessment procedure), in any of the cases covered by the present batch of appeals. No specific investigation was carried out or enquiries made with NLC authorities, by the .....

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C by the Department were not provided to the assessees/appellants, they could not explain the amounts received with reference to the work discharged by them. Therefore, the matters were remitted back to the assessing officer to provide the statement, provided by NLC, to the assessees/appellants to enable them to defend the demand of tax and, thereafter, the adjudicating authority was directed to pass orders after giving opportunity of hearing to the assessees. Further, all the issues were also d .....

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Tribunal is virtually an attempt to confirm the adjudication order. It is the further submission of the learned counsel for the appellants that the demands are barred by limitation, which the Tribunal failed to address and that the remand order is bereft of details as to reasons for remand. Further, it is the submission of the learned counsel for the appellants that the burden has been shifted on the appellants for segregating the works that would attract service tax, when there is no proper cl .....

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respondent/Department, on notice and instructions, submitted that the appellants were rendering the works mentioned in the show cause notices to NLC and therefore, they are liable to pay tax. The appellants are registered for the services, as mentioned in the show cause notices, and have been rendering the services to NLC and receiving payment thereof and, therefore, they are liable to pay service tax and the tax has been rightly demanded by the Department. It is further submitted that the rema .....

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ed the materials available in the typed set of documents. 12. Before proceeding further to decide the issue, it is relevant to note that it is the stand of the appellants/assessees that many of the services undertaken by them do not fall under taxable category, which has been pointed out by the Tribunal in para-5 (b) of its order, which, for better clarity, is extracted hereinbelow :- "a) Water supply-drainage for Government Hospital, Guest House in NLC. b) Drain cutting, dumping yard mines .....

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etc. i) Horticulture, lawn gardens, up-keeping watch & ward section office & Stores, ancillary mining activities, lawns & gardens. j) Pontoon shifting, pump laying, cleaning of drills. k) Loading, transporting scrap civil works in ash bund, lathe pump house, street lights, electrical work in canteen, removal of fly ash. l) Wiring in mine 1, 1 A entrance painting transformers, switch gears, lighting ventilation. m) Water supply works. n) Back feeding arrangements, AMC water treatment .....

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ing without clarity and the other on the plea of limitation. The Tribunal, however, in its order, while extracting the portion of the order of the Commissioner (Appeals) was of the view that the Revenue had discharged its burden by producing the statements given by NLC and that the assessees did not dispute it at any point of time and that the entire demand was raised on the basis of the statements provided by NLC. However, this finding of the Tribunal runs conter to the plea raised by the appel .....

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them. This finding of the Tribunal appears to be a fallacy on fact. As extracted by us in the earlier portion of the order, the various contentions raised by the present appellants before the Commissioner (Appeals) shows that that issue as raised is not pure and simple break-up of amounts, which should have been shown in the show cause notice, but the show cause notices itself being vague and bereft of details as to the nature of taxable services rendered by the appellants/assessees to NLC. 15. .....

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