Madras HC quashed the demand order passed by the Revenue Department, on the grounds that the reply filed by the assessee to the SCN was not considered even though the same was received by the Revenue Department.
Remanded the matter back for fresh consideration on merits and in accordance with the law.
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Further, directed the Revenue Department to pass final orders, after adhering to the principles of natural justice and providing the opportunity of hearing to assessee.
Clarification issued by CBIC, aptly applicable in GST also, stating that "No service tax on declared service, “Agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act" u/s 66E of the Finance Act, 1994;
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Further, clarifies that same cannot take place unless there are two parties, one of which expressly or impliedly agrees to do or abstain from doing something and the other agrees to pay consideration to the first party for doing or abstaining from such an act;
Emphasizes that such ‘contractual arrangement’ must be an independent arrangement in its own right and “There must be a necessary and sufficient nexus between the supply (i.e. agreement to do or to abstain from doing something) and the consideration.”;