Demand of service without classification of activity

PJ/Case Laws/2011-12/1307

Demand of service without classification of activity - sustainability of

Case: HI-COINS BUILDING PRODUCTS v/s COMMR.OF C. EX., CUS. & S.T., COCHIN

Citation: 2011 (23) S.T.R. 366 (Tri- Bang.)

Issue:- Demand of service tax confirmed without classifying the service rendered by the assessee – impugned order set aside and matter remanded for deciding the said issue.

Brief Facts:- Show cause notice was issued to the appellant for demanding service tax on the allegation that the service provided by the appellant fell under Commercial or Industrial Construction service. The Adjudicating Authority confirmed the entire demand with interest and also imposed penalties under various sections of the Finance Act, 1994.

Appellant is now before the Tribunal and stay petition is filed for waiver of pre-deposit of amounts demanded.

Appellant’s Contention:- Appellant contended that show cause notice as well as Order-in-Original has not classified the services under which the revenue wants to tax from them. They specifically stated the paragraphs of Order-in-Original wherein the Adjudicating Authority has come to a conclusion that the appellants had provided two different services, while in the order portion, the Adjudicating Authority has confirmed the entire demand without classifying under which service such demand had been confirmed. He further submitted that they were taking a plea before the Adjudicating Authority that they are covered under the category of ‘Works Contract Service.’

Reasoning of Judgment:- The Tribunal held that the show cause notice proceeds in a particular allegation indicating that the assessee’s services would fall under a particular service i.e., under ‘Commercial or Industrial Construction Services’ whereas in the Order-in-Original the Adjudicating Authority has come to the different conclusion that the appellant is providing ‘Erection, Commissioning and Installation Services’. On the confirmation of the demand they find that the entire amount has been confirmed without indicating the breakup of the amount attributable to the services rendered by the assessee. Since the adjudication order is silent on the exact services rendered by the assessee, the Tribunal considered it fit to set aside the impugned order and to remand the matter back to the Adjudicating Authority to reconsider the issue afresh.

Decision:- Appeal allowed by way of remand.

Comment:- The classification of service is very important. But many times, it involves disputes also. The service may fall under different categories also. To end such disputes, the department has come up with new idea of negative list of services. Even the draft is put up for discussion. This will end the classification disputes.

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PJ/Case Laws/2011-12/1307

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