Service Tax Demand cannot be raised in category for which SCN was not issued

India Guniting Corporation Vs Commissioner of Central Tax (CESTAT Delhi)

Commissioner was not justified in confirming the demand of service tax under the category of ^‘works contract’ for the period post June 1, 2007 even if the levy of service tax was not exempted under Notifications, since, the show cause notice that demand it service tax under the three categories namely (i) commercial or industrial construction, (ii) construction of complex and (iii) management, maintenance or repair.

FULL TEXT OF THE CESTAT JUDGEMENT

India Guniting Corporation¹ has filed this appeal to assail the order dated January 31, 2018, by which the two show cause notices dated October 13, 2011 and March 25, 2015 have been adjudicated upon by the Commissioner, Central Tax, Delhi². In regard to the first show cause notice, an amount of Rs.4,72,33,255/- has been confirmed and the remaining demand of Rs.79,96,862/- has been dropped. In regard to the second show cause notice, an amount of Rs.1,05,19,077/- has been confirmed and the remaining demand of Rs.63,08,584/- has been dropped. The Commissioner has also imposed penalty and interest. The appeal assails that part of the order passed by the Commissioner that has confirmed the demand of service tax.

2. The appellant is engaged in commercial construction and management, maintenance and repair. The first show cause notice dated October 13, 2011 for the period 2006-07 to 2010- 11 was earlier adjudicated upon by an order dated March 20, 2013. This order was assailed by the Appellant by filing Service Tax Appeal bearing number 57966 of 2013. Initially an interim order dated September 21, 2015 was passed, requiring the Appellant to furnish a detailed chart on matters enumerated in paragraph 5 of the order. The appeal was ultimately allowed by order dated October 27, 2015. The impugned order was set aside and the Adjudicating Authority was directed to scrutinise the nature of each of the work covered in the show cause notice. The demands made on ^‗works contract‘ prior to June 1, 2007 were directed to be excluded. The Authority was also directed to re-examine whether any of the repairs and alteration contracts related to buildings that are being rented out to public offices so that the demand made on such contracts could also be excluded. The relevant portion of the order passed by the Tribunal is reproduced below:

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