Custom, Excise & Service Tax Tribunal
A.M. Manickam vs Oio No.84/2009 (C) Dt. 29.12.2009 on 29 May, 2017
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH, CHENNAI S.No. Appeal No. Appellant Respondent
Impugned order passed by CCE Puducherry & CCE(A) Chennai
1. ST/189/2010 CCE & ST Pondicherry A.M. Manickam OIO No.84/2009 (C) dt. 29.12.2009
2. ST/194/2010
-do-
C. Vadivelu
-do-
3. ST/319/2012
-do-
N. Arithas OIA No.18/2012(PST) dt 16.02.2012
4. ST/321/2012
-do-
P. Muthiyan OIA No.20/2012(PST) dt 16.02.2012
5. ST/467/2012
-do-
MCV & Co.
OIA No.32/2012(PST) dt 01.05.2012
6. ST/468/2012
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Anand Electricals OIA No.36/2012(PST) dt 02.05.2012
7. ST/469/2012
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Thirumurugan Enterprises OIA No.37/2012(PST) dt 02.05.2012
8. ST/470/2012
-do-
V. Hari Krishnan OIA No.38/2012(PST) dt 02.05.2012
9. ST/472/2012
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S.L.N. Enterprises OIA No.40/2012(PST) dt 02.05.2012
10. ST/474/2012
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DDK Constructions OIA No.42/2012(PST) dt 02.05.2012
11. ST/475/2012
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NPS Constructions OIA No.43/2012(PST) dt 02.05.2012
12. ST/476/2012
-do-
P. Selvaraj OIA No.44/2012(PST) dt 02.05.2012
13. ST/477/2012
-do-
Neyveli Engineers OIA No.45/2012(PST) dt 02.05.2012
14. ST/478/2012
-do-
S. Thamizhmani OIA No.46/2012(PST) dt 02.05.2012
15. ST/479/2012
-do-
Indira Industries OIA No.47/2012(PST) dt 02.05.2012
16. ST/480/2012
-do-
V. Govindan & Co.
OIA No.48/2012(PST) dt 02.05.2012
17. ST/481/2012
-do-
Sri Venkateswara Constructions OIA No.49/2012(PST) dt 02.05.2012
18. ST/482/2012
-do-
Sakthi Engineering Works OIA No.50/2012(PST) dt 02.05.2012
19. ST/483/2012
-do-
KSP Construction OIA No.51/2012(PST) dt 02.05.2012
20. ST/484/2012
-do-
V.Loganathan & Co.
OIA No.52/2012(PST) dt 02.05.2012
21. ST/485/2012
-do-
V.Mathiyalagan OIA No.53/2012(PST) dt 02.05.2012
22. ST/486/2012
-do-
Jothi Constructions OIA No.56/2012(PST) dt 02.05.2012
23. ST/487/2012
-do-
G. Thirumalingam OIA No.57/2012(PST) dt 02.05.2012
24. ST/488/2012
-do-
Mano Engineering Co.
OIA No.58/2012(PST) dt 02.05.2012
25. ST/490/2012
-do-
Sekar Engineering Works OIA No.62/2012(PST) dt 02.05.2012
26. ST/491/2012
-do-
P. Rajendran OIA No.63/2012(PST) dt 02.05.2012
27. ST/492/2012
-do-
V. Loganathan &Co.
OIA No.71/2012(PST) dt 02.05.2012
28. ST/493/2012
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V. J. Constructions OIA No.72/2012(PST) dt 03.05.2012
29. ST/494/2012
-do-
Chellappan Engineering Constructions OIA No.73/2012(PST) dt 03.05.2012
30. ST/495/2012
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Suriya Engineering Corporation OIA No.74/2012(PST) dt 03.05.2012
31. ST/496/2012
-do-
Kuppusamy Constructions OIA No.75/2012(PST) dt 03.05.2012
32. ST/497/2012
-do-
Vivek Engineering Co.
OIA No.76/2012(PST) dt 03.05.2012
33. ST/498/2012
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A Rajendran & Co.
OIA No.77/2012(PST) dt 03.05.2012
34. ST/499/2012
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N. Krishnamurthy OIA No.78/2012(PST) dt 03.05.2012
35. ST/500/2012
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D. Sekar OIA No.79/2012(PST) dt 03.05.2012
36. ST/501/2012
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G.Kalyanasundaram OIA No.80/2012(PST) dt 03.05.2012
37. ST/502/2012
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S. Sundaram & Sons OIA No.81/2012(PST) dt 03.05.2012
38. ST/503/2012
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K. Venkatesan OIA No.82/2012(PST) dt 03.05.2012
39. ST/505/2012
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M. Suriyakumar OIA No.85/2012(PST) dt 03.05.2012
40. ST/506/2012
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M. Siva Subramaniam OIA No.86/2012(PST) dt 03.05.2012
41. ST/507/2012
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MRM Constructions OIA No.88/2012(PST) dt 03.05.2012
42. ST/508/2012
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N. Rathinavel & Sons OIA No.89/2012(PST) dt 03.05.2012
43. ST/509/2012
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N. Arunachalam OIA No.90/2012(PST) dt 03.05.2012
44. ST/510/2012
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C. Arokiasamy OIA No.91/2012(PST) dt 03.05.2012
45. ST/515/2012
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S. Ayyakannu & Co.
OIA No.87/2012(PST) dt 03.05.2012 Appearance for the Appellant/Department:-
S/Shri S. Nagalingam, AC (AR) & K.P. Muralidharan, AC (AR) Appearance for the Respondents/Assessees:-
S/Shri J. Shankar Raman, V. Ravindran, Advocate Mrs. Radhika Chandrasekar, Advocate Ms. K. Nancy, Advocate CORAM Honble Ms. Sulekha Beevi C.S., Member (Judicial) Honble Shri Madhu Mohan Damodhar, Member (Technical) Date of Hearing : 15.05.2017 Date of Pronouncement: 29.05.2017 Final Order Nos. 40816-40860 / 2017 Per Bench, The issue involved in all these appeals being common, they are taken up together and are disposed of this common order. The appeals were earlier disposed by the Tribunal vide Final Order dated 25.8.2014 by which the Tribunal remanded the matters to the adjudicating authority. Being aggrieved, the respondents/assessees filed appeals before the Honble High Court of Madras and vide judgment dated 30.4.2015 and other dates, the Honble High Court has remanded the matter to the Tribunal for consideration.
2. Brief facts of the case are that the land belonging to large number of people was acquired for Neyveli Lignite Corporation Ltd. (NLC) a mining project. As a compensation package to those persons whose lands were acquired prior to 2004, the NLC initially gave employment to one of the family members whose lands were thus acquired. When there was no further scope to give employment, NLC decided to award minor contracts to the members of the families to promote themselves as entrepreneurs. Thus the respondents/assessees were awarded various contracts from the year 2003 onwards by NLC. During the year 2006, Service Tax Department made elaborate meetings with the officials of NLC and collected details of the contracts awarded by NLC, on the premise that the respondents who were awarded the contracts were rendering taxable services. In 2006, most of the assesses obtained service tax registration and paid service tax on some of the services as pointed out by the department. It appeared to the department that respondents were not discharging service tax on entire amount received and entire services rendered by them, the department addressed NLC for details about the payments made to respondents. The same was provided by NLC and on the basis of these details furnished by NLC, around 180 show cause notices were issued to various contractors. After personal hearing and adjudication, in two of the matters, (A. Manickam and C. Vadivelu), the adjudicating Commissioner dropped the proceedings for the reason that the show cause notice was vague and did not specify the correct classification of services rendered by the appellant and therefore not legal and proper. In other cases, while the original authority confirmed the demand along with interest and imposed penalties, however, in appeal, Commissioner (Appeals) set aside the demand on the same ground that the show cause notices did not specify the correct classification of services and the demand was vague and therefore not legal and proper. Being aggrieved, the department filed appeals before the Tribunal and vide Final Order Nos. 4700 to 4753/2014 dated 25.8.2014, as stated above, matter had been remanded to the adjudicating authority. The said order of remand was challenged before the Honble High Court whereby the Honble High Court remanded the matters for reconsideration. Hence appeals are once again before this forum.
3.1 On behalf of the Department, learned AR Shri S. Nagalingam submitted that it is wrong to say that the show cause notices were vague and did not mention the classification of services. The show cause notices had mentioned the category of the services rendered by the respondents to be, namely, Management, Maintenance or Repair Service, Commercial or Industrial Construction Service and Manpower Recruitment or Supply Agency Service. The assessees had obtained registration in the year 2006 and they were executing the works as per the contracts even prior to taking registration. The period involved is from 2003 04 to 2007 -08 and since the assessees have been rendering the same services for which they have obtained registration, the contention raised by them that the category of the services has not been mentioned in the show cause notice is without basis. Further, they have paid service tax in some of the matters and the demand is raised only for the short-demand. The demand has been arrived at basing on the details furnished by NLC who has awarded the contracts to the assessees. Pursuant to the interim order of the Tribunal, the Department had produced the letter issued by NLC showing the details of the category of services as well as the details of demand on various categories of services. Only after the department commenced enquiries with NLC and only after being advised by the departmental officers to do so, the assessees obtained registration for various clauses of services.
3.2 It is also submitted by Revenue that copies of statement showing the payment details by various units of NLC to the concerned assessees had been annexed to the show cause notices. In the circumstances, the assessees cannot contend that they were not aware of the reasons for demand of service tax.
3.3 Regarding non-mentioning of the services provided by the assessees on which service tax had been demanded, it is argued that the assessees were very well aware of the services in which they were involved and hence this cannot be taken as an excuse.
3.4 Department's main grievance as emerging from the grounds of appeal can be briefly summarised as follows :
(i) Assessees had provided different types of taxable services. When service is consisting of a combination of different services, most specific description shall be preferred than a more general description. Rate of tax liability is same for taxable services.
(ii) Burden of proof lies on tax payers-assessees. As they had not provided any details regarding category wise payment received from their client but they had not provided.
(iii) Invocation of extended period is very much applicable.
4. Respondent- assessees were represented by counsels S/Shri V. Ravindran, J. Shankar Raman, Mrs. Radhika Chandrasekar and Ms. K. Nancy. Common submissions were made on behalf of all the Advocates by Shri V. Ravindran. In the first place, he reiterated the counter arguments submitted in the cross-objection earlier filed by them. He submitted that the show cause notices in all the appeals are verbatim copies of one another. A compilation of show cause notices, corresponding Orders-in-Original and Orders-in-Appeal and Tribunals Final Order dated 30.10.2014 was submitted. The main argument of the respondents can be summarized as follows:-
4.1 The show cause notices proceeded on a presumption that the money received by the assessees from NLC is entirely the consideration for rendering taxable services. This presumption is without any basis. In fact, many of the activities of the assessees would be very much in the nature of non-taxable services, which fact has also been noted by the Honble High Court of Madras in their judgment dated 30.4.2015 on the CMA Nos. 764 to 788/2015 filed by the assessees (para 12 of High Court judgment). As has been noted by the Honble High Court, the assessees had also provided non-taxable services like water supply / drainage for Government Hospitals in NLC, earth work of school building and painting of Government hospital, irrigation system etc. The assessees were providing both taxable as well as non-taxable service. The show cause notice did not mention either the classification or the break-up of the demand.
4.2 Though the show cause notices have demanded quantum of service tax on taxable value adopted for the purpose by the department, no justification or reasoning is available in the show cause notice for arriving at such taxable value. Further, service tax has merely been demanded on taxable value without clarifying as to what are the services which are being taxed.
4.3 In the show cause notice, it is stated that the statement of NLC is annexed. In the Final Order dated 25.8.2014, passed by the Tribunal, the Tribunal had directed the department to furnish this very statement to the assessees which is evidence that the said statement was not earlier furnished to the assessee. The fact is that no such statement had been provided to them along with the show cause notice. If proper classification was proposed and the amount paid by NLC was amortized against the services mentioned in para 1 of the show cause notice, then the assessee would be eligible for benefit of abatement in regard to works contract service, erection, commissioning and installation services, trading etc. Such benefit could not be claimed because of the lack of clarity in classification of services in the show cause notice.
4.4 With regard to the contention of the department that the contracts are continuous contracts and the assessees having taken registration in 2006 are liable to pay service tax for the period prior to this, learned counsel has submitted that the contracts were not continuous contract. The contracts were work specific. The moment the work is executed, the contract is over and the department has not raised the demand on any of the contracts awarded by NLC but merely on the total amount paid to the assessee.
4.5 All the show cause notices were issued by the department only on two dates i.e. 21st and 22nd of October, 2008. It is understood that such similar show cause notices were also issued on the same dates to some other assessees also. Therefore, it is evident that there was mass issue of notices on same/alternate dates without any application of mind. All these aspects have been taken into cognizance by both the adjudicating Commissioner as well as the Commissioner (Appeals) who have passed orders in assessees favour. The assessees are semi-literate persons and for no reason they are being forced from one authority to another.
5.1 Heard both sides and have gone through the facts of the matter.
5.2 The assessees, admittedly, are contractors who carried out various activities for the NLC. It appears that these activities had been provided over the years. The department in the course of enquiries made with NLC in early 2006 felt that the said activities were in the nature of taxable services for the purposes of levy of service tax. During the course of these enquiries, it appeared that appellants were advised to get themselves registered under the Finance Act, 1994, which was adhered to by the assessees in March/April 2006. 5.3 With this background, we find that the basis for demand of service tax from these assessees is on the statement obtained by the department from NLC showing payment details by various units of that company to various assessees. This fact is confirmed from the SCNs themselves predominantly in para-3 of the notices. 5.4 Further study of these notices reveals that pursuant to such collection of payment details from NLC, and based on those details, appellants had been visited with letters from the jurisdictional Superintendent of Central excise asking them to pay service tax on the amounts received for the taxable services rendered by the asessees to NLC. It is interesting to note that there is no indication of whether the said letters from the Range Superintendent had given the nature of services on which service tax was being demanded and the calculation for arriving at the tax liability. It is further pertinent to note that as per the SCNs themselves these letters had not been provided to the assessees along with notices. 5.5 Presumably, the same statement of NLC is the one with regard to para-3 of the SCNs where it is mentioned that "M/s.NLC Ltd. have furnished details of amounts paid by them to M/s...... (assessee) for the services rendered by them during the period [.....] (copies of the statement showing payment details by various units of NLC are annexed). It is the grievance of the assessees that this statement was never provided or annexed at the time of issue of the SCNs. We find that this contention indeed has some merit. This very Tribunal in its earlier final order dt. 25.8.2014 remanded the case, wherein one of the remand directions was as follows :
"(a) the adjudicating authority shall provide the statement of NLC to the assessees".
..."
5.6 Another major contention of the assessees is that the SCNs did not give break up of the amounts with reference to each services rendered by them. This claim is also not untrue. None of the SCNs indicate the reasoning for proposing tax liability, the services alleged to have been provided by the assessee and the individual liability of each of such service. Nor is there any worksheet forming part of the notice or as an annexure. Sadly, all these notices merely refer to the amount received by the assessees from NLC for the dispute period and have thereupon directly proceeded to calculate the service tax liability thereon on the basis of whole order. Cognisance of this glaring discrepancy has been taken note of not only in the Tribunal's earlier final order dt. 25.8.2014 as also in the orders pronounced by Hon'ble High Court of Madras in the CMAs filed by all the assessees-respondents. 5.7 Pursuant to the High Court orders, all these appeals have been heard by the Tribunal on a number of occasions. In an Interim Order No.141-194/2016 dt. 17.11.2016, this Bench inter alia ordered as follows :
"3. There was controversy on certain correspondences forming part of the show cause notice. Therefore both sides are directed to mutually decide a date to inspect the original records in the office of the learned Commissioner (A.R) and resolve their controversy and finally argue on 8.12.2016. Both sides take notice for that date. There shall be no adjournment on that day.
4. We direct the learned jurisdictional Commissioner to depute a representative of his office who is conversant with the matter to assist the office of the learned Commissioner (A.R.) and the Bench for disposal of the matter."
[CMA Nos.764-788 of 2015] 5.8 Pursuant to the above interim order, it appears that verification of records was caused by counsel of the respondents, in the presence of departmental officers at the office of the Commissioner of Central Excise, Puducherry. This has been conveyed by letter dt. 13.3.2017 from Commissioner of Central Excise, Pondicherry. In an annexure to the said letter interalia while it is confirmed that annexure/statement to SCN was found in the file, some of them sent by NLC and some by departmental officers and some without signature, however, it is now clear that break up as per the classification of activities was not given in any of the said statements. 5.9 It also emerges that the said statement had not been given at the time of issue of the SCNs on 21.10.2008 but were given only in January-March 2015 pursuant to CESTAT direction of 30.10.2015. However, at least in respect of three appellants, the said statement has not been given to them in spite of such directions. 5.10 The Commissioner (Appeals) in the impugned orders has decided in favour of the assessees mainly on the following grounds :
(i) the SCN is not maintainable for the reason that the SCN has failed in giving specific services under which they should have discharged the tax as against the classification done them;
(ii) the impugned order is not sustainable inasmuch as the order does not speak individual services and amount received under each service;
(iii) the department was aware of all the facts for quite long time as early as 2006 and hence, there is no suppression of facts; hence, extended period cannot be invoked in the present case.
5.11 In respect of Appeal No. S/469/2012 M/s. Thirumurugan Enterprises, based on directions from the earlier Bench, the Revenue had caused certain verifications to be done. Pursuant to the same, vide letter dated 15.11.2016, the Commissioner of Central Excise, Puducherry, inter alia, informs that the letter OC No. 720 dated 28.7.2008, referred to in para 2 of the show cause notice issued to them, where the department claims to have given the details of differential tax liability, is not available in the range records; that copies of contracts / agreements made with NLC are not available; that only the contracts / agreement number with details of nature of work provided by Thirumurugan Enterprises and other respondents were found. The letter also informed that quantification of service tax was made based on the details submitted by NLC. The letter annexed a Note of the Divisional Assistant Commissioner on the background that led to the issue of these bulk show cause notices. On a perusal of the Note, it is seen that the said Assistant Commissioner has given the following justification for the manner and method of issue of these bulk notices:-
As it is practically not feasible to adhere to the normal procedure of issuing summons, collecting agreement copies and recording statements, considering the volume of work, show cause notices were issued to the contractors based on the data received from M/s. NLC indicating the service provided as the service for which they had registered themselves or the service as deduced from the data received from M/s. NLC. 5.12 From these discussions above, it is amply clear that the entire process of issue of show cause notices was done in a very hasty and slipshod manner without giving any raison detre for demanding service tax on the various activities deduced by department to have been provided by the respondents/assessees.
5.13 The show cause notices do not also indicate the list of the activities provided by the department, or justify all these activities fall within the ambit of taxable services for the purposes of the Finance Act, 1994 or indicate specifically the separate tax liabilities demanded on each such individual taxable service.
5.14 Viewed in this light, we find that the respondents herein have been asked to show cause to defend the indefensible. When the show cause notice itself is bereft of clarity and does not convey the exact nature of the alleged act or omission or any other infraction that has resulted in differential tax liability, the assessees will then find themselves helpless and unable to see any light of the end of the dispute tunnel. 5.15 Such short comings and deficiencies in the show cause notices are uncurable defects which will inevitably cast a shadow on the proceedings that have emanated from it.
5.16 In the result, the demands of tax that may have been resultant of these proceedings will fail, ab initio.
6.1 In these circumstances, we are unable to find any infirmity in the impugned orders in these cases, of Commissioner (Appeals) setting aside the demands against the assessees confirmed by authority, for example:-
(a) In Order-in-Appeal No. 32/2012 dated 1.5.2012 passed in the case of M/s. MCV & Co. The relevant portion of the order is reproduced below-:-
5.5 I find that instant case the impugned Order-in-Original does not contain the details like the category of services under which the service tax liability falls under activities carried out by the appellant and whether such activities could be classified under specific categories of services and applicability of relevant provisions to the said category. Hence I hold that the above case laws are applicable to the instant case.
6.0 I find that the LAA has observed in the impugned order that the appellant were awarded different contracts under different agreement numbers by M/s. NLC providing taxable services under Management, Maintenance or Repair Services, Manpower Recruitment or Supply Services and Industrial or Commercial Construction Services.
6.1 Further these services that were levied to service tax by Finance Act, have undergone changes in nomenclature for subsequent years under Finance Act and it is not free from doubt the activities during the period starting from 2003-04 carried out in different point of time by the appellant would fall under respective category of service and the issue world require clarity to arrive at what should be taxable value. Because of the doubt in the mind of the department the entire amount paid by the appellant to M/s. NLC during the period 2003-04 to 2007-08 was taken as assessable value and demand was worked out on the total amount received by the appellant from M/s. NLC. The department by doing so had failed to quantify the service tax payable by the appellant and to find out whether the appellant had undervalued or under declared the value of services alleged to have been rendered by them. Therefore the demand is not sustainable since the appellant was not under notice as to what exact category he is supposed to pay Service Tax.
6.2 In this connection it is pertinent to point out that Honble CESTAT in the case of Hi-Cons Building Products Vs. Commr. Of C.Ex. & Cus.&S.T., Cochin has held as follows:
Order Non-speaking order Show cause notice classifying activity under Commercial or Industrial Construction service Adjudication order containing different conclusion that Erection, Commissioning and Installing service besides construction service provided - Entire demand confirmed without break-up of amount attributable to services rendered and order silent on exact services rendered Impugned order set aside Matter remanded to adjudication authority to consider afresh Sec.73of Finance Act, 1994. [para 5] 6.3 I find that the aforesaid case law is applicable to facts of the instant case. I find that the impugned SCN dated 23.10.08 has proposed to recover a demand for the period of 5 years from 2003-04 to 2007-08 under the proviso to Sec.73 (1) of Finance Act, 1994. I find from the impugned order the department had been aware that the appellant had been rendering services to M/s. NLC and enough time had been given to the appellant to pay service tax alleged to have been received by the appellant from M/s. NLC for the services rendered by them during the period 2003-04 to 2007-08. This being so the appellant cannot be fastened with duly liability invoking proviso of Sec.73 as there was no intention on the part of the appellant to evade payment of Service Tax as further evidenced by the correspondences the department had with M/s. NLC and the Contractor Association of NLC had with NLC as well department on various occasions.
6.4 In this connection it is pertinent to point out that the Apex Court in the case of Pushpam Pharmaceuticals Company Vs. CCE, Bombay reported in 1995 (78) E.L.T. 401 (S.C.) has held that Where facts are known to both the parties the omission by one to do what he might have done and not that he must have done does not render it suppression of fact. In view of the Apex Courts decision, since the facts was known to the department, the extended time limit is not available to the department and the issue is totally time barred.
(b) So also, we do not find any reason to interfere with the similar views expressed by the adjudicating Commissioners, for example in an impugned order dated 29.12.2009 in the case of A. Manickam (Appeal No. ST/189/2010).
5) I have carefully gone through the case records. While appreciating the facts as recorded in the SCN and the correspondences mentioned there-in one cannot miss to notice that the issue is a long drawn dispute where neither the party nor the department have had any clue to exactly fix the services provided by the notice in to the exact categories of services under the provisions of Finance Act, 1994 vide sec 65 and 65 (105) ibid i.e., the statutory provisions for levy of the service tax. Even at the stage of issuing the notice, after having finally said to have collected the relevant details, such an important exercise is amiss on the part of the department, which alone would have made the notice / demand a chance to survive. The notice, neither in the narrative part nor in the annexure where details of quantum of the demand is show, specifies the category of service under which demand is sought to be made; all that was said in the notice was the perusal of the nature of work from the statements given by M/s. NLC reveals that the services rendered by the notice fall mainly (emphasis provided) under the category of Management. Maintenance or Repair Services and other services like Commercial or Industrial Construction Services and Manpower Recruitment or Supply Agency Services which are taxable services w.e.f. 1-7-2003, 10.09.04, 7.7.1997 respectively vide para 1 of the notice. Other than the above, nowhere in the notice, there were allegation / charges as to the service provided by the notice to an extent of such and such amount attracting service tax under such and such category of service.
5.1) I have taken note of the allegation made in the notice vide para 7 suppressed the fact of providing these taxable services and having received the value for the services rendered to M/s. NLC in the ST3-return by not including certain services with intention to evade payment of appropriate Service Tax by paying Service Tax only ono the lesser value declared in the St3 returns, without indicating which is the amount (in the total demand) vis-a-vis the service where excess amount has been collected but paid less tax by leaving out the alleged suppressed value. Thus vague allegations have been made in the notice.
5.2) As brought up in their reply and submissions during hearing on 16.12.09 by the noticee the notice is not maintainable as a sufficient notice to make a demand under the provisions of Central Excise Act, 1944 namely Sec 11A ibid. The noticee have referred to several judgments of the Honble SC and Tribunals, totally numbering 14 on the maintainability of the impugned notice, of which I find, one is more eloquent to decide on the present case namely CCE Vs Brindavari Beverages 2007 (213) ELT 487 decided by the Honble Supreme court: The Show cause Notice is the foundation on which the department has to build up its case. If the allegations in the Show Cause Notice are not specific or on the contrary vague, lack details and or unintelligible that is sufficient to hold that the notice was not given proper opportunity to meet the allegations indicated in the show cause notice in this case what the appellant has tried to highlight is the alleged connections between the various concerns. Therefore the Apex court has held As no sufficient material mush less any material has been placed on record to substantiate the stand of the appellant, the conclusions of the Commissioner as affirmed by CEGAT cannot be faulted.
5.3) From the facts on record/ notice it is understood that the notice were registered with the department from 11-07-2005 and were filing ST3 returns with the department as also paid service tax as determined by them. Having been that the notice is not maintainable and void, the same is to be held void in its totally and not in part, in as much as the notice cannot be held to be severable as held by the larger bench in the case of Godrej Soaps Vs CCE, Mumbai 2004 (174) E.L.T. 25 (Tri-LB) and as per the ratio of the Honble Supreme Court judgment reported in 2003 (153) E.L.T. 241 (S.C.). Therefore, I am restrained from going in to other aspects of the notice. 7.1 While arriving at the aforesaid conclusions, we draw sustenance from the ratio of various judgments / decisions passed by the higher appellate forums. 7.2 The Honble Supreme Court, in the case of Commissioner of Central Excise Vs. Brindavan Beverages Ltd. 2007 (213) ELT 487 (SC), has categorically held that the show cause notice is foundation on which the department has to build its case and if allegations in the notice are not specified and in contrary vague, lack details and/or intelligible, the same would be sufficient to hold that notice was not given proper opportunity to meet the allegations. The relevant portion of the judgment is reproduced below:-
10.?There is no allegation of the respondents being parties to any arrangement. In any event, no material in that regard was placed on record. The show cause notice is the foundation on which the department has to build up its case. If the allegations in the show cause notice are not specific and are on the contrary vague, lack details and/or unintelligible that is sufficient to hold that the noticee was not given proper opportunity to meet the allegations indicated in the show cause notice. In the instant case, what the appellant has tried to highlight is the alleged connection between the various concerns. That is not sufficient to proceed against the respondents unless it is shown that they were parties to the arrangements, if any. As no sufficient material much less any material has been placed on record to substantiate the stand of the appellant, the conclusions of the Commissioner as affirmed by the CEGAT cannot be faulted. 7.3 In the case of Delta International Limited Vs. CC 2012 (281) ELT 400 (Cal.) that a SCN will fall through when it is devoid of any grounds or reasons or particularly in support of its claim for short payment. The relevant portion of the judgment is reproduced below:-
15.?In our opinion, the flaw in the show cause notice is fundamental. The subject says non-realization of customs duty. The body of the show cause notice does not disclose how there is non-realization of customs duty or short payment of it. However, documents have been brought on record including an affidavit-in-opposition and notes of submission purporting to establish what was to be collected was central excise duty and that such duty is computed as customs duty, but nevertheless, collected as central excise duty.
The customs authorities by virtue of the above notifications had power to issue the show cause, it was submitted.
16.?In our opinion, whether they have the power to do so or not is very secondary. No case has prima facie been made out against the appellant/writ petitioner which he can be required to answer. Under well settled principles if a show cause notice does not disclose any contravention or infraction of any provision of law the person or such show cause notice is a nullity. But, here, it is not such a case. The grounds made in the show cause notice allege that customs duty of Rs. 7,08,98,160/- is due but the reasons in support of such claim in the show cause notice are very ambiguous so much so it is impossible to understand anything else by reasonably any prudent person. Therefore, the appellant/writ petitioner, in our opinion, is not in a position to answer such show cause notice, which is against the rules of natural justice.
7.4 The Honble High Court of Madras, in the case of J.A.Motor Sport Vs. State of Tamil Nadu as reported in 2017 (345) ELT 205 (Mad.) has ruled that issuance of SCN is not an empty formality but it is a statutory requirement which should be complied with to satisfy principles of natural justice and a requirement that should be complied with by the authorities to satisfy the principles of natural justice. The Court inter-alia held as follows:-
10. One more ground, on which, the impugned show cause notices are to be held as bad in law is that the notices are bereft of particulars and in the sub-column, it is stated as proposal received. Obviously, this proposal is from the officials of the Enforcement Wing. If such is the case, then the petitioner is entitled to know as to why the officials of the Enforcement Wing sent a proposal, though the petitioner had given an elaborate reply to the officials of the Enforcement Wing on 8.2.2016 as undertaken by them in their statement recorded by the officials of the Enforcement Wing on 31.12.2015. 7.5 Andhra Sugars Ltd. Vs. Commissioner of Central Excise, Guntur 2007 (207) ELT 534, the Tribunal has held that non-quantification of duty liability in the show cause notice is a serious defect and which will result in the impugned order becoming unsustainable. The relevant portion of the decision is reproduced below:-
10.2?The appellants had claimed exemption of Notification No. 5/98 under Sl. No. 268. We are reproducing the relevant entries of the exemption Notification :
All goods manufactured in a factory and used within the same factory for building a body or fabrication or mounting or fitting of structure or equipment on a chassis of a motor vehicle of heading No. 87.02 or 87.04. A careful reading of the entry 268 would show that whatever be the classification of the goods, if they are used in the factory for fabrication of a structure to be mounted on a chassis, they are entitled for the benefit of the exemption. These conditions have been fulfilled, as the original authority has given a finding after visiting the factory. The Commissioner (A) has not properly discussed as to why the benefit of the exemption Notification cannot be given to the impugned goods. The fact that the structure manufactured is mounted on the chassis of a vehicle is not in dispute. Hence, the original authority is right in extending the benefit of the exemption Notification. 7.6 The Tribunal in Shubham Electricals Vs. Commissioner of Central Excise, Rohtak 2015 (34) STR held that failure to gather relevant facts for issuing proper show cause notice cannot provide justification for vague and incoherent show cause notice resulting in seriuos transgression of due process of law. The relevant portion of the order is reproduced below:-
13.?We have noticed earlier that the show cause notice itself adverts to the fact that the appellant had provided copies of 20 work orders executed in relation to CWG Projects, particulars of which are set out in a tabular form in para 5 of the show cause notice. From the description of the works in this table, officers could have classified the several works into the appropriate taxable service which may appropriately govern rendition of these services. In any event officers are not handicapped and the Act provides ample powers including of search under Section 82 of the Act to obtain information necessary to pass a proper, disciplined and legally sustainable adjudication order. The disinclination to employ the ample investigatorial powers conferred by the Act is illustrative of gross Departmental failure and cannot afford justification for passing an incoherent and vague adjudication order. The failure to gather relevant facts for issuing a proper show cause notice cannot provide justification for a vague and incoherent show cause notice which has resulted in a serious transgression of the due process of law. The aforesaid decision of the Tribunal was upheld by the Honble High Court of Delhi as reported in 2016 (42) STR J312 (Del.) 7.7 In the case of Everest Educational Charitable Trust Vs. CST, Chennai 2014 (36) STR 79 (Tri.-Chen.), the Tribunal held that a lack of specific proposal in the SCN is fatal to the proceedings. The relevant portion is quoted below:-
7.?We have considered the submissions by both sides. We find that there is a specific finding in the initial adjudication order to the effect that training courses conducting by the appellants were vocational training. There is no specific proposal in the revision show cause notice to revise this finding. Even when this issue was raised by the appellant in reply to the revision show cause notice and during the personal hearing also, no finding is given by the revisionary authority on this issue. This in our view is fatal to the proceedings because the finding that they were eligible for the exemption under Notification 24/2004-S.T. had become final and there was no proposal for revising the finding in the show cause notice and here is no finding in the order and no reasoning has been given on this issue. Therefore, the preliminary objection raised by the ld. Advocate for the appellant is valid and we are not going into merits of this issue whether the appellants were running a commercial institute or whether the training was really a vocational training or the question whether extended period of time would be invoked in the original show cause notice. 7.8 In the case of Ispat Industries Ltd. Vs. CCE, Nagpur 2012 (280) ELT 236 (Tri.-Mum.) the Tribunal held that for every case, SCN is the foundation and the assessees are required to defend the allegation made in the show cause notice.
7.9 In the case of Apex Fluidomatics Limited Vs. CCE, Ahmedabad 2014 (3113) ELT 106 (Tri.-Ahmd.) held that any infirmity in the SCN cannot be bridged by adjudication proceedings and order passed by the adjudicating authority and first appellate authority.
8. In the light of the conclusions herein above and following the ratio of the case laws cited supra, we are of the considered opinion that all the appeals filed by the department do not have any merit and will require to be dismissed, which we hereby do. So ordered.
(Pronounced in open court on 29.5.2017) (MADHU MOHAN DAMODHAR) (SULEKHA BEEVI C.S.) Member (Technical) Member (Judicial) Rex 2 ST/189/2010 & 44 Ors.