Service tax demands confirmed without valid service of notice violate natural justice principles, leading to appeal's success.

PER: M.M. PARTHIBAN

This appeal has been filed by Mrs. Varkha Deepak Melwani, Mumbai (herein after, for short, referred to as ‘the appellant’) against the Order-in-Appeal No. SK/CGST/A-I/Mum/301/23-24 dated 14.11.2023 (referred to, as ‘the impugned order’) passed by the Commissioner of CGST & Central Excise (Appeals-I), Mumbai.

2.1 Brief facts of the case, leading to this appeal, are summarized herein below:

2.2 The appellant herein, inter alia, is engaged in providing “Renting of immovable property service” and for the purpose of payment of service tax and for compliance with service tax statute are registered with jurisdictional authorities holding Service Tax Registration No. AAHPM3360QST001. They are also holding PAN No. AAHPM3360Q for the purpose of income tax purpose. The appellant was also erroneously allotted by the departmental AIO portal one another Service Tax Registration being No. AAHPM3360QST002, which was not operational.

2.3 During the course of verification of ST-3 Return data filed by the appellant with the data regarding declared turnover in Income Tax Return (ITR)/Tax Deducted at Source (TDS) through 26AS for the year 2015-16, the department had come to a conclusion that the ST-3 return indicated lesser taxable value of services at Rs.4,20,000/-, whereas the ITR data indicated the total value of services as Rs.14,40,000/- resulting into a differential value of taxable services of Rs.10,20,000/-. Thus, the department had concluded that the appellant had not declared the turnover of services to the above extent and that service tax on the value of Rs.10,20,000/- at the higher rate of 14.50%, had not been paid by the appellant. The department had applied higher rate of tax, in the absence of month-wise break-up figures of taxable services, to determine and apply the relevant tax rate of 12.36% upto 31.12.2014 & 14.50% from 01.01.2015.

2.4 On the above basis, Department issued Show Cause Notice (SCN) No.75/AC/Dn.IX/R-V/HRR/2020-21 dated 30.12.2020 to the appellant. In the absence of any reply to the SCN and by simply sending an e-mail stating that the SCN had been issued beyond the statutory period of five years and that in none of the personal hearing dates/opportunities given, the appellant had appeared before the adjudicating authority, on the basis of the allegations mentioned in the SCN and the data available on record, the original authority had proceeded to adjudicate the case. The original authority i.e., Assistant Commissioner, Division-IX, Mumbai South CGST & Central Excise Commissionerate in adjudication of the case had confirmed the demand of service tax amounting to Rs.1,39,721/- under Section 73 (1) of the Finance Act , 1994 along with interest and had imposed Penalty of Rs.1,39,721/- under Section 78 and further penalty of Rs. 5,000/- each, under sub-sections (1)(c), (1)(d) and (2) of Section 77 ibid vide Order-in-Original dated 21.03.2023. Being aggrieved with the aforesaid order dated 21.03.2023 of the original authority, the appellant had filed an appeal before the Commissioner (Appeals) on 11.07.2023. In the grounds for delayed filing of the appeal, the appellant had stated that she had received the order of the original authority only on 13.07.2023 on her e-mail and she not being computer savvy, she came to see the mail in April,2023 when she was preparing to file Income Tax returns. Further, as her Chartered Accountant who was handling the tax compliance issues had expired, she was clueless about the service tax login credentials. In deciding the said appeal vide impugned order dated 14.11.2023, learned Commissioner (Appeals) has condoned the delay in filing the appeal beyond the sixty days but within 90 days’ time limit in terms