2006 (2) TMI 654 - AT - Service Tax

Rejection of the refund claim - Payment of service tax earlier paid under Rule 7A of the Service Tax Rules read with Section 71A of the Finance Act, 1994 - service from goods transport operators - Valuation - HELD THAT - The service tax paid on the basis of self-assessment as per the statutory provision was a valid collection of tax by the government and therefore, it was in no way refundable to the appellant who was liable to pay the same under the amended provisions. The period for filing of the returns was provided in Section 71A which was six months from the date on which the Finance Act, 2003 received the assent of the President, and the appellant filed the return within the period so prescribed. In a case which was covered by Section 71A read with Rule 7A the date of filing of return cannot be drawn from the provisions of Section 70. In fact, Section 71A clearly specified that the provision of Section 70 did not apply to persons referred to in the proviso to sub-section (1) of Section 68 for the filing of return. It cannot, therefore, be accepted that the time limit for filing of return by the appellant should be computed on the basis of the provision of Sections 70 and 73 as from the date on which the half-yearly return could have been filed under Section 70 read with Rule 7 which were wholly inapplicable in case of the appellant when specific provision of Section 71A was made in the context of the persons like the appellant for filing of the return and period within which the return was to be furnished was also provided. The contention that the appellant was not liable to pay the service tax since the recover would have been time barred on the basis of the deemed liability having been arisen earlier on the expiry of the relevant period in 1998, is, therefore, wholly misconceived. The return filed by the appellant under Section 71A on the basis of self-assessment could have been verified under Section 71 by the concerned officer in view of the specific provision made in Section 71A to the effect that Section 71 shall apply to such return. However, even when it was not taken up for verification, it cannot be said that the service tax paid on the basis of self-assessment was not tax assessed. Since the service tax was validly paid under the liability arising under the amended provisions, particularly under Section 71A requiring the appellant to file such return, the appellants are not entitled to the refund. There was no question of issuance of any show cause notice under Section 73 for recovery, because, the appellants had paid the tax on self assessment basis under the return filed under Section 71A of the Act read with Rule 7A of the Act. None of the contentions raised on behalf of the appellant has therefore any substance. We, find ourselves in complete agreement with the reasoning adopted and conclusions reached by the authorities below and dismiss this appeal.

Issues Involved:
1. Legality of the refund claim for service tax paid under protest.
2. Applicability of retrospective amendments to the Finance Act, 1994.
3. Validity of self-assessment and the corresponding tax liability.
4. Impact of the Supreme Court's decision in Laghu Udyog Bharati case.
5. Interpretation of Section 71A and its applicability to the appellant's case.
6. Time limitation for filing returns and the relevance of Section 73.

Detailed Analysis:

1. Legality of the Refund Claim for Service Tax Paid Under Protest:
The appellant had paid service tax under protest for the period from 16-11-1997 to 1-6-1998, with the right to seek a refund if the Apex Court later deemed the tax ultra vires. The Assistant Commissioner rejected the refund claim, and this decision was upheld by the appellate Commissioner. The Tribunal found that the service tax paid on the basis of self-assessment was a valid collection of tax by the government, and thus, not refundable. The appellant's protest was contingent on the Supreme Court declaring the provisions ultra vires, which did not happen as the provisions were upheld in Gujarat Ambuja Cements Ltd. v. Union of India.

2. Applicability of Retrospective Amendments to the Finance Act, 1994:
The Tribunal noted that the retrospective amendments made by the Finance Acts of 2000 and 2003 were intended to validate actions taken under the earlier provisions. The amendments included modifications to Section 65 (definition of "assessee") and Section 68 (liability to pay service tax). These amendments were upheld by the Supreme Court, making the appellant liable for the service tax for the period in question. The Tribunal emphasized that validating legislation retrospectively curing defects in a taxing statute is a well-recognized course.

3. Validity of Self-Assessment and the Corresponding Tax Liability:
The appellant filed returns and paid service tax based on self-assessment under Section 71A, which was inserted by the Finance Act, 2003. The Tribunal held that the self-assessment and payment were valid under the statutory provisions, and the appellant was liable to pay the service tax. The Tribunal rejected the appellant's argument that the tax was paid under protest and should be refunded, as the basis for the protest (potential ultra vires declaration) was invalidated by the Supreme Court's decision upholding the amendments.

4. Impact of the Supreme Court's Decision in Laghu Udyog Bharati Case:
The appellant relied on the Supreme Court's decision in Laghu Udyog Bharati, which had declared certain rules ultra vires. However, the Tribunal clarified that the statutory foundation for that decision was replaced by the amendments made by the Finance Acts of 2000 and 2003. The Tribunal noted that the decision in Laghu Udyog Bharati ceased to be relevant for construing the provisions as amended.

5. Interpretation of Section 71A and Its Applicability to the Appellant's Case:
Section 71A, inserted by the Finance Act, 2003, required persons like the appellant to file returns for the specified period within six months from the enactment date. The Tribunal concluded that the appellant's liability to file returns and pay service tax was clearly established under the amended provisions. The Tribunal rejected the appellant's contention that the time limit for filing returns should be computed based on Sections 70 and 73, which were inapplicable to the appellant's case.

6. Time Limitation for Filing Returns and the Relevance of Section 73:
The Tribunal held that the specific provision of Section 71A, which provided a six-month period from the date of enactment for filing returns, was applicable to the appellant. The Tribunal rejected the argument that the demand for service tax was time-barred, as the return was filed within the prescribed period under Section 71A. The Tribunal also noted that there was no need for a show cause notice under Section 73, as the appellant had paid the tax on a self-assessment basis.

Final Order:
The Tribunal agreed with the reasoning and conclusions of the authorities below and dismissed the appeal, affirming that the appellant was not entitled to the refund of the service tax paid.

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