Mere Remanding back the case by Tribunal without going into Merits not sufficient

Brief of the Case

In the case of M/s.Thirumurugan Enterprises Vs The Customs, Excise & Service Tax Appellate Tribunal, Chennai, the Hon’ble Madras High Court held that remanding back the case by Tribunal, without going into merits and asking the adjudicating authority to re-adjudicate the matter will not suffice. The issues raised by the appellant and answered by the Commissioner (Appeals) in their favour has to be considered by the Tribunal on its own merits and there being no finding on the issues in the manner in which the plea has been taken by the present appellants, who were successful before the Commissioner (Appeals).

Brief Facts

The appellants are contractors, who carried out various activities for the Neyveli Lignite Corporation (for short ‘NLC’), a Government of India Undertaking. The respondent found that the activities, undertaken by the appellants, come within the purview of service tax and, therefore, they are liable to pay service tax.

Accordingly, the appellants were visited with show cause notices. It further appears that subsequent to the show cause notices, in the adjudication proceedings, many of the parties did not appear and the matters were adjudicated and assessment orders were passed demanding service tax. It is also not in dispute that some amount has been paid pending the dispute and subsequently substantial amounts have also been paid.

These appellants, consequent to the assessment order, pursued the matter by filing appeals before the Commissioner (Appeals) and the Commissioner (Appeals) considered the prima facie case pleaded by the appellants. The Commissioner (Appeals) accepted the plea of the appellants both on vagueness of show cause notice and also on the plea of limitation and set aside the order of adjudication.

Aggrieved by the order of the Commissioner (Appeals), the Department pursued the matter in appeal before the Tribunal on the findings of the Commissioner (Appeals) with regard to the vagueness of the show cause notices as well as with regard to the plea of limitation.   The Hon’ble tribunal remitted back the matter to the assessing officer to provide the statement, provided by NLC, to the appellants to enable them to defend the demand of tax and, thereafter, the adjudicating authority was directed to pass orders after giving opportunity of hearing to the assessee. Further, all the issues were also directed to be kept open for decision by the adjudicating authority. Aggrieved by the said order of the Tribunal, the appellants are before this Court by filing the present appeals.

Contentions of the Appellant

The appellant contended that there was no proper classification of works rendered by the appellant in the show cause notices and, therefore, the show cause notices suffered from illegality, which cannot be cured and, accordingly, the remand by the Tribunal is virtually an attempt to confirm the adjudication order. Further, it was submitted that the demands are barred by limitation, which the Tribunal failed to address and that the remand order failed to record the details as to reasons for remand. 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. Further, each appellant has provided a different service, which has not been appreciated in proper perspective by the Tribunal and a common order has been passed, which is per se illegal and unsustainable. Therefore, it was prayed that the order of the Tribunal is liable to be set aside.

Contentions of the Respondent

The respondent contented that the appellants were rendering the works mentioned in the show cause notices to NLC and therefore, they are liable to pay tax. The appellants are registered for the services, as mentioned in the show cause notices, and have been rendering the services to NLC and receiving payment thereof and, therefore, they are liable to pay service tax and the tax has been rightly demanded by the Department. It was further submitted that the remand by the Tribunal is an open remand with no fetters on both the sides and the appellants cannot have any grievance with the said order as they are only directed to show the taxable services rendered by them for the purpose of payment of tax. In such circumstances, it was submitted that no interference is called for with the order of the Tribunal.

Held by Hon’ble Madras High Court

The Hon’ble Madras high Court noted that it is the stand of the appellant that many of the services undertaken by them do not fall under taxable category, which has been pointed out by the Tribunal in its order.

However, a careful perusal of the orders of the adjudicating authority, the Commissioner (Appeals) as also the Tribunal would reveal that 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 assessee 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 appellant 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.

Further, The Hon’ble Court stated that the Tribunal, while glossing over the various decisions of the Tribunal and the Supreme Court, has come to an erroneous conclusion that the only grievance of the assessee is that the Revenue did not give break-up of the amounts with reference to each service rendered by them. This finding of the Tribunal appears to be a fallacy on fact. 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 appellant to NLC. The Hon’ble High Court further stated no finding has been rendered by the Tribunal on the aspect of limitation.

In view of the above, the Hon’ble High Court stated that without going into these issues, mere remanding the matter back and asking the adjudicating authority to re-adjudicate the matter after giving break-up of the details to the appellants will not suffice. The issues raised by the appellant and answered by the Commissioner (Appeals) in their favour has to be considered by the Tribunal on its own merits and there being no finding on the issues in the manner in which the plea has been taken by the present appellants, who were successful before the Commissioner (Appeals).

Thus, the Hon’ble High Court sets aside the order of the Tribunal and remands the matter back to the Tribunal to answer the issues in relation to the findings of the Commissioner (Appeals) which was under challenge before the Tribunal in the appeals.