2026-VIL-1433-CESTAT-CHD-ST
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SERVICE TAX CESTAT Cases

Service Tax – Foreign currency expenditure on imported services – Show Cause Notice issued treating foreign currency expenditure as taxable import of services – Appellant contended SCN was vague, mechanical and unintelligible as it failed to identify underlying service received, its classification or taxability without specifying amount of foreign currency expenditure incurred on each service – Whether SCN can be termed vague and mechanical when it does not separately identify expenditure service-wise – HELD – Purpose of SCN is to inform recipient of allegations so he can meet them effectively and is not prejudiced by manifestly vague notice – Notice cannot be read as legislative enactment requiring exceptional lucidity but must convey allegations clearly enabling recipient to defend himself – What is required is whether allegations made have been conveyed and set forth to enable recipient to get opportunity to defend – SCN need not identify foreign currency expenditure service-wise if it identifies all services and makes allegations clear – If SCN was unintelligible and nothing could be made of it, appellant could not have given elaborate submissions service-wise; fact that appellant could identify different services and payments and give submissions accordingly indicates SCN was not vague and unintelligible – As long as SCN makes allegations clear so appellant can file suitable reply, SCN cannot be termed vague and unintelligible; non-identification of foreign currency expenditure service-wise has not been fatal to proceedings - Service Tax – Extended period of limitation – Invocation of extended period for foreign currency expenditure on imported services – SCN dated 20.10.2011 invoked extended period under proviso to Section 73(1) of Finance Act, 1994 based on CAG audit conducted 22-11-2010 to 26-11-2010 – Appellant contended extended period was not invocable as there was no suppression, fraud or wilful mis-statement by appellant – Whether extended period can be invoked based on mere audit findings without bringing out specific acts of fraud, wilful mis-statement or suppression with intent to evade – HELD – SCN must bring out specific acts of commission or omission on part of appellant which constitute fraud, collusion, wilful mis-statement or suppression of fact with intent to evade duty to justify invocation of extended period – SCN merely mentioning Section 73 provision without bringing out ingredients required for extended period is not sufficient – Ingredients required for invoking extended period must be brought out with evidence in SCN itself – When ingredients for extended period have not been brought out with evidence in SCN, extended period cannot be invoked – Extended period cannot be invoked based on mere audit findings without specific evidence – Demands based on extended period must be restricted to normal period - Service Tax – Multiple Show Cause Notices for same period – Appellant had two SCNs issued: first SCN dated 13.10.2011 based on Service Tax audit conducted and second SCN dated 20.10.2011 dated only 7 days later based on CAG audit – First SCN invoked extended period of limitation – Second SCN again invoking extended period for overlapping period – Whether it is permissible to issue another SCN for same period invoking extended period when SCN already issued for same period invoking extended period – HELD – It is not open for Department to issue subsequent SCN for same period invoking extended period when SCN has already been issued for same period and period, as held by Hon'ble Supreme Court in Nizam Sugar Factory versus Collector of Central Excise – Double issuance of SCN for same period by Department is not permissible – When one SCN has already been issued for a period invoking extended period, subsequent SCN for same period with extended period should not have been issued - Service Tax – Secondment of employees – Payment for seconded employees from overseas entities – Appellant contended deputation of employees from overseas entities did not constitute import of service and employees were absorbed and remained under control and management of appellant – Whether service tax payable on secondment/deputation of employees from overseas entities – HELD – Principle established by Hon'ble Supreme Court in Northern Operating Systems Pvt. Ltd. is applicable – Appellant was service recipient for service of manpower recruitment and supply services by overseas entity in regard to employees seconded to appellant for duration of their deputation – Service tax is payable on secondment of employees – However, invocation of extended period of limitation in respect of secondment demand is not tenable and unreasonable – Assessee is liable to discharge service tax liability on secondment for normal period only, not extended period – Demand on secondment of employees confirmed only for normal period; demand beyond normal period is set aside - Service Tax – Adjudication – Adjudicating authority's obligation to consider appellant's submissions backed by CA certificates – Whether Adjudicating Authority can confirm demands without properly considering and rationally addressing appellant's submissions backed by CA certificates – HELD – Adjudicating Authority must have rational and reasoned approach in confirming demands against appellant and must record findings so meaning is unequivocally conveyed – Adjudicating Authority cannot rely on figures and CA certificates for computation while rejecting arguments of appellant without recording satisfactory and rational findings – Where appellant submits issue is mistake/inadvertent error and not deliberate suppression, Adjudicating Authority must address such submissions with valid reasoning – Mistake does not cease to be mistake only because it occurred multiple times; Adjudicating Authority must properly appreciate appellant's explanations and accounting practices – Adjudicating Authority failed to properly appreciate submissions and must reconsider matters on remand taking into account appellant's submissions, evidence provided, accounting standards and procedures and ratio of cases decided after impugned order.
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