Service Tax - Show Cause Notice to one party Demand from another - And Revenue takes the case to Supreme Court - with no success
AN assessee called Narayana Coaching Centre, a proprietary concern was taken over by Narayana Learning Pvt Ltd. The Service Tax authorities issued a Show Cause Notice to Narayana Learning Pvt Ltd for the service rendered by Narayana Coaching Centre. The demand was confirmed on Narayana Coaching Centre and not Narayana Learning Pvt Ltd.
The CESTAT observed, "it appears that no show-cause notice was issued to the present appellant; the show-cause notice is a foundation of the adjudication and without service of show-cause notice defence is denied. That makes adjudication fatal. The appellant not having been brought home to the charge following the ratio laid down by Hon'ble Supreme Court in the judgment in the case of Commissioner of C. Ex., Bangalore vs. Brindavan Beverages (P) Ltd.- the demand of Rs. 2,23,16,485/- for the year 2010-11 does not sustain. Appellant succeeds on this count."
A demand of Rs. 2.23 crores goes out of the window because they did not know as to who should be put on notice. []
Revenue cannot keep quiet when such huge demands are lost on such technical grounds. They rushed to the High Court with an appeal. The High Court observed, " The learned Tribunal found that no show cause has been issued to the assessee. In that view of the matter, we are unable to interfere with this fact-finding. When the show cause notice was not issued to the assessee, the proceedings in connection therewith is a nullity and the adjudication thereof is also non est."
They did not exactly rush to the Supreme Court, but filed an SLP with the usual delay.
The Supreme Court magnanimously condoned the delay - but dismissed the petition on 7th January 2015 []