2007 (12) TMI 501 - HC - Service Tax

Summary

Issues involved: Interpretation of Sections 70, 71A, and 73 of the Finance Act, 1994 regarding liability to file return and serve Show Cause Notices.

In the present case, the Department appealed against an order by the Customs, Excise and Service Tax Appellate Tribunal, New Delhi, based on a Show Cause Notice issued to the assessee u/s 73 of the Finance Act, 1994. The assessee contended that their case did not fall under Section 73 as they were not liable to submit returns prior to the amendment introducing Section 71A. The Tribunal's decision was influenced by the Supreme Court's ruling in L.H. Sugar Factories case, stating that cases falling under Section 71A cannot be covered by Section 73 notices. The Tribunal concluded that Show Cause Notices under Section 73 were not maintainable for such cases. The appeal of the assessee was allowed based on this interpretation.

The Union of India argued that the assessee's non-liability to file returns did not absolve them from the liability to pay service tax. They contended that the Tribunal failed to consider the ongoing liability of the assessee to pay service tax, despite the Supreme Court's judgment. However, the Court noted that the Tribunal's judgment was limited to the issue of the maintainability of Show Cause Notices under Section 73 for cases falling under Section 71A. The Court clarified that the liability to pay tax was a separate issue not addressed in the Tribunal's decision. The Court upheld the Tribunal's decision that the Show Cause Notice under Section 73 was not sustainable for cases under Section 71A, leaving the question of tax liability open for future proceedings.

Therefore, the Court dismissed the Revenue's appeal, finding no substantial legal questions involved in the matter. The judgment was based on the interpretation of relevant provisions of the Finance Act, 1994 and the applicability of the Supreme Court's ruling in similar cases.