Standard Chartered Finance Pvt. Ltd. Vs Principal Commissioner of CGST & Central Excise (CESTAT Mumbai)
Service Tax Demand Set Aside as Show Cause Notice Was Held Vague and Defective; CESTAT Grants Relief Because Revenue Did Not Specify Exact BAS Classification in SCN; CESTAT Cancels Tax Demand Over Failure to Clearly State Charges in Show Cause Notice; Service Tax Proceedings Invalid Because SCN Did Not Identify Relevant Provision: CESTAT Mumbai.
In Standard Chartered Finance Pvt. Ltd. Vs Principal Commissioner of CGST & Central Excise, the Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) set aside a service tax demand of Rs. 2.73 crore along with interest and penalties on the ground that the Show Cause Notice (SCN) was fundamentally defective for failing to specify the relevant sub-clause of Section 65(19) of the Finance Act, 1994 dealing with “Business Auxiliary Services” (BAS).
The dispute related to the period from 1 August 2005 to 30 April 2006. The appellant was registered under several taxable service categories including Maintenance and Repair Services, Business Auxiliary Services, and Real Estate Agent Services. During a departmental audit covering April 2003 to March 2007, the Revenue observed that the appellant had not charged or paid service tax on amounts received as “Data Processing Fee” prior to May 2006. The appellant contended that the services were Information Technology Enabled Services, which were specifically excluded from the scope of BAS until 1 May 2006. However, the Department rejected this explanation and relied upon a CBEC Circular dated 21 August 2003 to argue that merely using computer systems for business activities did not make the services information technology services.
