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Issues involved:
- Revision of order by Commissioner under section 84 of the Finance Act, 1994 - Demand of service tax and penalty on party - Applicability of service tax on goods transport operators (GTO) services received by the appellants - Legal position based on Supreme Court judgments regarding liability to pay service tax on GTO services Revision of order by Commissioner under section 84 of the Finance Act, 1994: The Assistant Commissioner initially dropped the proposals of demanding tax and imposing penalties on the party. However, the Commissioner revised this order under section 84 of the Finance Act, 1994, after issuing a notice to the party. The revisional order confirmed the proposals in the show cause notice (SCN), leading to a demand for service tax and a penalty equal to the tax amount. The reason cited for revising the order was the admission of civil appeals by the Commissioner of Central Excise, Vadodara and Chennai III, by the Supreme Court, indicating a need for further deliberation on the issue. Demand of service tax and penalty on party: The department issued a show cause notice to the party, demanding service tax and proposing penalties for not paying tax on goods transport operators (GTO) services received by the appellants. The total demand amounted to Rs. 2,46,905, along with an equal penalty. The dispute regarding this demand was adjudicated by the Assistant Commissioner, whose decision was later revised by the Commissioner, leading to the confirmation of the proposals against the party. Applicability of service tax on goods transport operators (GTO) services received by the appellants: During the period from November 16, 1997, to June 1, 1998, the appellants were not liable to pay service tax on GTO services they received. This exemption was based on a Supreme Court judgment in the case of Laghu Udyog Bharti v. Union of India, which struck down a provision making GTO service recipients liable to pay tax as ultra vires section 66 of the Finance Act, 1994. Subsequent amendments in the Finance Act, 2000, and 2003, clarified the liability of GTO service recipients to pay tax, but the legal position during the relevant period exempted the appellants from such liability. Legal position based on Supreme Court judgments regarding liability to pay service tax on GTO services: The Tribunal's decision in the case of L. H. Sugar Factories Ltd. v. Commissioner of Central Excise, Meerut-II, which held that GTO service recipients remained outside the scope of section 73 of the Finance Act, 1994, was upheld by the Supreme Court. The Commissioner's decision to revise the order against the party was deemed unnecessary, as the legal position established by the apex court in previous judgments settled the issue. Therefore, the impugned order was set aside, and the appeal was allowed in favor of the party.
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