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2007 (6) TMI 31 - AT - Service TaxGTO Service Revenue contended that assessee was liable to pay the service tax under GTO service for the impugned period Held that revenue contention was correct and allowed
Issues Involved:
1. Liability to pay Service Tax by the respondent. 2. Validity of the show cause notice issued under Section 73. 3. Applicability of the exemption for Small Scale Industries (SSI). 4. Effect of retrospective amendments and validating provisions. 5. Applicability of the Tribunal's decision in L.H. Sugar Factories Ltd. case. 6. Compliance with procedural requirements for issuing show cause notice. Detailed Analysis: 1. Liability to Pay Service Tax by the Respondent: The respondent, a registered trader of excisable goods, utilized services of Goods Transport Operators (GTOs) from 16-11-1997 to 1-6-1998. Service Tax was payable on such services by the recipient as per Notification dated 5-11-1997. The respondent neither registered under Rule 4 of the Service Tax Rules nor paid Service Tax under Rule 6 and did not file returns as required by Rule 7. The adjudicating authority confirmed the liability of Rs. 9,981/- as Service Tax. The respondent initially claimed exemption as a Small Scale Industry (SSI) unit but later withdrew this assertion, confirming its status as a trading company, thus liable to pay Service Tax. 2. Validity of the Show Cause Notice Issued Under Section 73: The show cause notice issued on 29-11-2002 invoked Section 73 read with Section 70 of the Finance Act, 1994, alleging failure to file returns and pay Service Tax. The Appellate Commissioner set aside the adjudicating authority's order, relying on the Tribunal's decision in L.H. Sugar Factories Ltd., which held that Section 71A did not bring the class of persons under the net of Section 73. The Tribunal found that the show cause notice was inadequate and inapplicable to the extended date for filing returns and paying Service Tax under Section 71A, as extended by the Supreme Court. 3. Applicability of the Exemption for Small Scale Industries (SSI): The respondent initially claimed exemption under the Notification dated 6-2-1998, which kept Service Tax in abeyance for SSI units. However, it was later clarified that the respondent was solely a trading company and not engaged in manufacturing activities, thus not eligible for the SSI exemption. The adjudicating authority correctly held the respondent liable to pay Service Tax as a dealer of excisable goods. 4. Effect of Retrospective Amendments and Validating Provisions: The Finance Act, 2000, and Finance Act, 2003, retrospectively amended and validated the provisions, making the recipient liable to pay Service Tax for the period from 16-11-1997 to 1-6-1998. The Supreme Court in Gujarat Ambuja Cements Ltd. v. Union of India confirmed that the law must be taken as having always been as brought about by the Finance Act, 2000, nullifying the basis of the decision in Laghu Udyog Bharati v. Union of India. 5. Applicability of the Tribunal's Decision in L.H. Sugar Factories Ltd. Case: The Appellate Commissioner relied on the Tribunal's decision in L.H. Sugar Factories Ltd., which was based on the Supreme Court's decision in Laghu Udyog Bharati. However, the Supreme Court in Gujarat Ambuja Cements Ltd. held that the statutory foundation for Laghu Udyog Bharati had been replaced, making the decision inapplicable. The Tribunal in J.K. Industries Ltd. confirmed that recipients under Section 71A were brought under the net of Section 73. 6. Compliance with Procedural Requirements for Issuing Show Cause Notice: The Tribunal emphasized the necessity of issuing a revised show cause notice under Section 73 read with Section 71A, reflecting the extended date for filing returns and paying Service Tax. The show cause notice dated 29-11-2002 did not meet this requirement, rendering the demand unsustainable. The Tribunal noted that the respondent had already paid the tax suo motu, and no question of refund arose in this appeal. Conclusion: The appeal by the Revenue was dismissed, upholding the Appellate Commissioner's order. The Tribunal found no valid reason to interfere with the impugned order, emphasizing the procedural inadequacies in the show cause notice and confirming the respondent's liability based on the established facts and retrospective amendments.
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