By TIOL News Service

CHENNAI, JUNE 12, 2015: WHILE disposing a batch of appeals filed by various contractors of Neyveli Lignite Corporation, against demand of Service Tax, the Commissioner (Appeals), Pondicherry set aside the demands on the ground that the Show Cause Notices did not contain the category of services under which the liability would fall, nature of activities carried out by them and the valuation of the services. On limitation also the Commissioner (Appeals) held in favour of the assessees. Aggrieved by the same, the department filed appeals before the CESTAT. The Tribunal vide - 2015-TIOL-05-CESTAT-MAD allowed the revenue's appeals by way of remand by holding inter alia that “ it is the duty of the Assessees to explain the activities in respect of the amounts in question received by them from NLC as they had entered into contract with the NLC for rendering services of various nature” . The assessees are now before the High Court against the remand order by the Tribunal.

The appellants contended 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. - that the burden has been shifted on the appellants for segregating the works that would attract service tax, when there is no proper classification made with regard to the works, by NLC, on which aspect of the matter the show cause notices are also silent.

After hearing both sides, the High Court held:

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 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 counter to the plea raised by the appellants/assessees before the Commissioner (Appeals) as the show cause notices were challenged on the very foundation that they are vague and without particulars as to classification of works that attracts service tax.

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.

The issue of limitation has been answered by the Commissioner (Appeals) in favour of the present appellants, but which finding has not been considered by the Tribunal while discussing the issue. No finding has been rendered by the Tribunal on the aspect of limitation.

The arguments of the standing counsel for the Department that all the issues can be trashed out before the adjudicating authority does not find favour with this Court as the Department cannot be allowed to fill up the lacunae in the show cause notices on the basis of an open remand as alleged by appellants.

Accordingly, the High Court remanded the matter to the Tribunal to answer all the issues in relation to the findings of the Commissioner (Appeals).

(See 2015-TIOL-1432-HC-MAD-ST)