Adjudicating authorities must comply with remand directions; failure to re-quantify service tax vitiates the de novo order.

The Appellant, M/s Nandan Constructions, provided works contract/construction services and manpower supply services during 2011–12 to 2014–15.

The Department issued a show-cause notice alleging short-payment of service tax based principally on Form 26AS, balance-sheet figures, ST-3 returns and other records.

In the original adjudication, the Commissioner confirmed service-tax demand of Rs. 32,89,721, along with interest and an equal penalty under Section 78 of the Finance Act, 1994, and imposed a penalty for delayed filing of ST-3 returns under Section 70 read with Rule 7C; the CENVAT-credit demand was dropped.

On appeal, the Tribunal remanded the matter for re-quantification of the manpower-supply demand after extending the benefit of Notification No. 30/2012-ST and for examination of the construction-service demand under Rule 2A of the Service Tax (Determination of Value) Rules, 2006.

In the de novo proceedings, the Commissioner substantially re-confirmed the original demand, stating that the Appellant had not produced additional documents and that there was no reason to depart from the original findings.

The Appellant contended that it had already reconciled the differences between Form 26AS and its books of account, filed the relevant returns, and deposited the tax allegedly payable.

1. Whether the Commissioner, in the de novo adjudication, complied with the Tribunal’s direction to re-quantify the manpower-supply demand after extending the benefit of Notification No. 30/2012-ST.

2. Whether the construction-service demand was required to be re-quantified under Rule 2A of the Service Tax (Determination of Value) Rules, 2006, as directed by the Tribunal.

3. Whether the re-confirmation of the demand was sustainable when the Appellant had produced a reconciliation of Form 26AS with its books and claimed that the applicable tax had already been paid.

The Tribunal applied the remand directions contained in its earlier Final Order No. 72790 of 2018, under which the manpower-supply demand had to be re-quantified by extending the partial reverse-charge benefit under Notification No. 30/2012-ST, and the construction-service demand had to be examined under Rule 2A of the Service Tax (Determination of Value) Rules, 2006.

The original demand and penalties had been invoked under Sections 73(1), 75, 78 and 70 of the Finance Act, 1994 read with Rule 7C of the Service Tax Rules, 1994.

The governing procedural principle was that an adjudicating authority is bound to give effect to the specific directions of the appellate forum and cannot merely reproduce the earlier adjudication without undertaking the directed re-examination and re-quantification.

The Tribunal found that its earlier order required a fresh quantification of both categories of services: manpower supply, after applying Notification No. 30/2012-ST, and construction services, under Rule 2A.

However, the Commissioner did not undertake that exercise and instead relied on the absence of further documents to preserve the original findings, effectively reproducing the earlier order.

The Tribunal held that this approach did not constitute compliance with the remand directions.

It further recorded that the Appellant had reconciled the Form 26AS figures with its books of account and had deposited the balance tax claimed to be payable; consequently, no further tax liability remained on the facts placed before the Tribunal.

The Tribunal emphasised that the appellate process is intended to finally resolve disputes rather than perpetuate them through an unchanged adjudication.

The impugned order confirming service tax of approximately Rs. 32.89 lakh, interest and penalties was set aside.

The appeal was allowed with consequential relief, if any, in accordance with law.