2004 (8) TMI 6 - AT - Service Tax

Service Tax Recipients of the service of transport operators are not liable to pay service tax Demand

Summary

Issues:
- Appeal against order-in-revision for demand of service tax
- Interpretation of retrospective amendment validating service tax rules
- Requirement of service tax payment by service availers
- Application of Section 73 for issuing show cause notice

Analysis:

The appeal was filed against an order-in-revision by the Commissioner of Central Excise & Customs, Vadodara, regarding the demand for service tax. The appellants availed transport services during a specific period and were issued a show cause notice for potential penalties and interest for contravention of certain provisions of the Finance Act, 1994. The Deputy Commissioner initially dropped the show cause notice based on a Supreme Court decision stating that service availers are not obligated to pay service tax. However, the Commissioner reviewed this decision in light of a retrospective amendment under Section 117 of the Finance Act, 2000, which validated certain provisions of the Service Tax Rules, 1994. Subsequently, a show cause notice was issued to the appellants demanding service tax on transport charges paid to operators. The main issue was whether the appellants were required to pay service tax post the retrospective amendment.

The Tribunal referred to a previous case, L.H. Sugar Factories Ltd. v. CCE, Meerut-II, which clarified that during the relevant period, Section 73 only applied to assessees liable to file returns under Section 70. Since the appellants were not expected to file returns under Section 70 before 2003, no notice could have been issued under Section 73 for non-filing of returns. Therefore, the Tribunal held that the Commissioner's order demanding service tax from the appellants was not legally valid. Consequently, the Commissioner's order was set aside, providing any necessary relief in accordance with the law.