BY TIOL News Service

NEW DELHI, DEC 11, 2015: APPEAL is filed against Order-in-Original dated 30.11.2012 in terms of which service tax demand of Rs.11,44,81,242/- for the period April, 2010 to March, 2011 was confirmed along with interest and penalties under Commercial or Industrial Construction Service (CICS) on the ground that the services rendered to the Delhi Development Authority (DDA), BSNL, NDMC, Reliance and Dr BL Kapoor Memorial Hospital were liable to service tax under CICS and that the abatement of 67% was not available in view of the fact that the cost of the material supplied free of cost by the service recipients was not added to the assessable value.

The appellant has contended that it was rendering services under composite contracts and paying service tax under composition scheme for works contract service and it had rendered service in relation to some projects which it claimed to be not liable to service tax. Departmental Representative on the other hand contended that the various projects claimed to be exempt did not fall under the exempted category but conceded that the adjudicating authority has not dealt with the contentions of the appellant.

After hearing both sides, the CESTAT held:

+ The adjudicating authority is completely wrong in observing that the value of free supplies has not been included in the assessable value thereby denying the benefit of 67% abatement under Notifications No. 15/2004 - ST, dated 10.09.2004 and No.1/2006 - ST, dated 01.03.2006 because there was no free supply of material by the service recipients. In the Show Cause Notice also it is nowhere stated that the service recipients had given free supplies to the appellant. Even in the adjudication order there is no evidence mentioned which was relied upon to arrive at a finding that there were free supplies of material by the service recipients. It is also seen that the adjudicating authority has recorded the submissions of the appellant that the projects mentioned above were exempt and the reasons therefor given by it (i.e., the appellant). However, we find that in the "discussion and finding" portion of the impugned order, there is no discussion or finding on the appellant's pleadings/contentions with regard to the non-taxability of the service rendered to IIT Delhi, National Press Centre, Dame Depot of Delhi Metro etc. On the other hand, the adjudicating authority has recorded that the impugned services were inter alia rendered to BSNL, Reliance and Dr BL Kapoor Memorial Hospital while no services were rendered to any of these organisations . The impugned order does not analyse the contentions of the appellant, denies 67% abatement on the ground which is non-existent and absent-mindedly states that the services were rendered to BSNL, Reliance and Dr BL Kapoor Memorial Hospital while no service was rendered to these organisations . The observation of the adjudicating authority that " in this case the dispute does not relate to the services and service tax payable thereon but is solely revolves around the issue of short payment of service tax due to non-inclusion of cost of raw-materials and goods supplied free by the recipients of service " is totally absurd because the dispute clearly relates to the taxability of the service rendered as the appellant had contended that the projects named above were exempt from payment of service tax and, as stated earlier, the issue of free supplies is conspicuous by its absence (rather than presence) in the present case. It seems that the "discussion and finding" portion of the impugned order is a shoddy and careless cut-and-paste job from another adjudication order which the adjudicating authority may have passed in relation to an earlier show cause notice which finds mention in the show cause notice dated 24.05.2012 related to the impugned order. There are some more such grave errors in the impugned order but we refrain from enumerating them all because what we have pointed out above is itself more than sufficient to infer that the impugned order is a product of complete non-application of mind on the part of the adjudicating authority who seems to have passed it in a state of delirium. Such conduct on the part of the adjudicating authority is too irresponsible to be ignored as it makes a mockery of the quasi-judicial process and can shake the faith of the assessees in the adjudication proceedings thereby inter alia adversely impacting the " ease of doing business " environment in the country. Such conduct clearly falls within the unacceptable range of gross adjudicatory indiscipline which is a matter of concern for CESTAT in its official capacity as an appellate body. Imposing of costs is one of the means available to CESTAT to instil a sense of responsibility and discipline in the lower adjudicating authorities with regard to adjudication matters and this is a fit case for CESTAT to exercise the power to do so.

(See 2015-TIOL-2647-CESTAT-DEL)