2007 (5) TMI 71 - AT - Service Tax

GTO services Revenue contended that the Respondent were received GTO service during the impugned period and accordingly liable to pay service tax Held that revenue contention was correct and allowed

Issues Involved:

1. Service Tax Liability and Demand
2. Filing of Returns
3. Penalty and Interest Imposition
4. Validity of Show Cause Notices
5. Time-barred Demand
6. Relevant Provisions and Amendments
7. Interpretation of Judicial Precedents

Detailed Analysis:

1. Service Tax Liability and Demand:

The respondents, engaged in cement manufacturing, received goods transport operators' services from 16-11-1997 to 2-6-1998. The Revenue contended that the respondents were liable to pay service tax under the amended provisions of Section 68(1) read with Section 71A of the Finance Act, 1994. The respondents filed their returns late and without payment of service tax, leading to the Revenue's demand for service tax, penalties, and interest.

2. Filing of Returns:

The respondents filed their ST-3B returns on 27-11-2003, within the time extended by the Supreme Court, but without accompanying payment of service tax. The adjudicating authority noted that the respondents did not deposit the service tax within the two-week extension granted by the Supreme Court.

3. Penalty and Interest Imposition:

The adjudicating authority imposed a lenient penalty under Section 76 of the Act, considering the respondents' late payment of service tax. However, no penalty was imposed under Section 77 as the returns were filed within the extended time.

4. Validity of Show Cause Notices:

The respondents argued that the show cause notices invoking the extended period were not sustainable under Section 73, as it stood before and after the Finance Act, 2003 amendments. They relied on the Tribunal's decision in L.H. Sugar Factories Ltd. v. Commissioner of Central Excise, Meerut-II, which stated that liability under Section 73 applied only to those required to file returns under Section 70.

5. Time-barred Demand:

The respondents contended that the demand was time-barred, as the relevant date should be the due date of filing returns under Section 70. The Commissioner (Appeals) agreed, stating that the show cause notices were beyond the provisions of Section 73 and the extended period could not be invoked.

6. Relevant Provisions and Amendments:

The Tribunal emphasized that the special provisions under Sections 71A and Rule 7A were designed to address the specific liability arising from the validating provisions. These provisions required the filing of returns and payment of tax within six months from 13-5-2003. The Tribunal noted that the scheme of Section 70 and Rule 7 was inapplicable to the special situation created by the validating provisions.

7. Interpretation of Judicial Precedents:

The Tribunal held that the reliance on the decision in L.H. Sugar Factories Ltd. was misplaced due to the amendments in the law, particularly the insertion of the proviso to Section 68(1) and Section 71A. The Tribunal followed the Supreme Court's decision in Gujarat Ambuja Cement Ltd. v. Union of India, which upheld the constitutionality of the validating provisions and stated that the law must be taken as having always been as brought about by the Finance Act, 2000.

Conclusion:

The Tribunal allowed the Revenue's appeal, setting aside the Commissioner (Appeals)'s order and restoring the orders-in-original. However, it invoked Section 80 of the Act to not restore the penalty imposed under Section 76, considering the respondents' pursuit of the matter in writ petitions before the Supreme Court and their eventual payment of the tax amount.

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