By TIOL News Service

MUMBAI, AUGUST 20, 2015: THE appellant is in the business of rendering consultancy services in the area of mergers, acquisitions, issue management, project appraisals, merchant banking, etc. and are registered under the category of "Banking and Financial Services" and "Business Auxiliary Services".

During the period in dispute viz. April 2004 to September 2009, the appellants availed CENVAT credit on various services like travelling service, advertising agency service, brokerage, real estate agent service, insurance paid on behalf of the staff, mediclaim paid on behalf of staff, entertainment service, hiring of indoor plants, canteen service, lift maintenance service, design service and club service etc.

Demand notices came to be issued proposing to disallow the total CENVAT credit availed of Rs.3.78 lakhs on the ground that the said services had got no nexus with the output service of the appellants.

As the Commissioner (A) upheld the demand, the appellant is before the CESTAT.

There was nothing much to be argued for the reason that the Tribunal found many things amiss in the SCN itself.

The Bench observed -

++ On perusal of the show-cause notice, I find that input service in respect of which credit have been proposed to be denied, is without giving any break up of the amount attributable to each service. Only a total amount is mentioned which is proposed to be disallowed. At the end of the show-cause notice, it is mentioned that the documents which are relied upon are (i) audit report and (ii) assessee's reply to the audit report.

++ Upon perusal of the impugned Order-in-Appeal and the Order-in-Original, I find that the whole proceedings are vitiated for want of proper show-cause notice. I find that the show-cause notice is vague as it does not give the break up of the amount under each head of input service proposed to be disallowed. Further, although the show-cause notice refers to the audit report and the assessee's reply to it, nowhere in the show-cause notice, neither the allegation of the audit has been discussed nor the reply of the appellant thereto and as to why the amount under the particular head is proposed to be disallowed. Also, no reason as to why the said services, are not input service, flows from the show-cause notice. Hence, I hold that the show-cause notices are vague, thereby vitiating the impugned order. Thus the impugned order is set aside.

The appeals were allowed with consequential relief.

In passing: Interestingly, in the present case the Tribunal had ordered a pre-deposit of Rs.1 lakh for granting stay in the matter. See 2012-TIOL-1161-CESTAT-MUM.

(See 2015-TIOL-1745-CESTAT-MUM)