ST - It was not open for adjudicating authority as well as Commr. (A) to visit an issue which was not subject matter of SCN: CESTAT
By TIOL News Service
MUMBAI, AUG 23, 2017: THE appellant is engaged in rendering taxable services falling under the category of Rent-a-Cab operator.
The SCN alleged that the appellant had short-paid service tax and this computation was done by extending the abatement of 60% available as per Notification No. 9/2004-ST dt. 9.7.2004.
Interestingly,the original authority confirmed the demand on the ground that the appellant is not entitled for the exemption Notification No. 1/06-ST since they had availed CENVAT credit.
The Commissioner (Appeals) rejected the appeal of the assessee and also held them ineligible for the benefit of notification 9/2004-ST.
Aggrieved with this order, the appellant is before the CESTAT and submits that the SCN had already extended the benefit of notification 9/2004-ST and computed the service tax liability therefore, both the lower authorities had proceeded beyond the scope of the show-cause notice.
It is further submitted that the crux of the demand lay in the question as to whether the rate of service tax applicable is the one prevalent on the date of provision of service or the date of receipt of service charges. Furthermore, the appellant had availed CENVAT credit on Input Service during the period April 2005 to March 2006 but during this period there was no bar in availing the same as far as notification 9/2004-ST is concerned.
A host of decisions were cited in support of the above submissions viz. -
2007-TIOL-118-SC-CX
2014-TIOL-560-CESTAT-DEL
2016-TIOL-747-CESTAT-MUM
2014-TIOL-701-CESTAT-DEL
2014-TIOL-1641-CESTAT-MUM
2009-TIOL-720-CESTAT-AHM
2013-TIOL-60-HC-DEL-ST
The AR while reiterating the findings of the impugned order submitted that even after considering the abatement there is a short payment of service tax amounting Rs.6,24,897/-which is apparent from the Annexure to show cause notice, therefore, the demand in any circumstances is sustainable.
The Bench observed -
++ We find from both the order-in-original and order-in-appeal that the demand was confirmed on the ground that the appellant is not entitled for the exemption notification No. 9/04-ST dt. 9.7.2004 on the ground that they have violated the condition of non-availment of cenvat credit.
++ In this regard, we have perused the show cause notice and observed that there is no allegation that the appellant have violated the condition of notification No. 9/04-ST. Moreover in the annexure to show cause notice which quantified the differential short paid service tax clearly shows that the show cause notice itself extended, the abatement of 60% as available under the Notification No. 9/2004-ST thereafter it is not open for the adjudicating authority as well as the Commissioner (Appeals) to visit to the issue of eligibility of the abatement provided under Notification No. 9/04-ST.
++ The entire finding which is based on the said notification is baseless and not flowing from the show cause notice . Therefore the order-in-original as well as the order-in-appeal are not sustainable on the ground on which the demand was confirmed. Even though the Notification No. 9/04-ST is not the subject matter of the entire case but even from academic point of view, we find that the cenvat credit which was alleged to have claimed by the appellant is in respect of the input service and the same was not barred in order to avail the exemption notification No. 9/04-ST during the relevant period. However even after allowing the abatement, as per annexure to the show cause notice there is a differential short paid service tax arise.
Adverting to the submission made by the appellant that the differential tax arises because of the difference of rate of service tax between the period when service charges were received and the period when service was provided, the Bench agreed that during the material time the rate of service tax was applicable as on the date of provision of service and not as per the date of receipt of service charges.
Nonetheless, since both the lower authorities had not gone into this aspect which was the core issue, the matter was remanded to the original authority.
The Bench also made it clear that it was not open for the AA to revisit the issue of abatement under notfn. 9/2004-ST since it was not the subject matter of the SCN.
The appeal was allowed by way of remand.
(See 2017-TIOL-3056-CESTAT-MUM )
