2007 (7) TMI 20 - AT - Service Tax

Demand (Service tax) - Alleged that appellants availed GTO service and he didn t paid the service tax on said service and accordingly SCN issued u/s 73 of FA, 1994 for recovery of service tax - Held that SCN invoking section 72 ibid not maintainable

Summary

Issues:
1. Stay application for waiver of pre-deposit of service tax and stay of recovery.
2. Applicability of Section 73 of the Finance Act, 1994 for recovery of service tax.
3. Interpretation of Section 71A and Section 73 in relation to GTO service and C&F Agents service.
4. Comparison with previous judgments and their relevance.

Analysis:

The case involved a stay application by M/s. Durairaj Mills Ltd. seeking waiver of pre-deposit of service tax and stay of recovery. The appellants had availed Goods Transport Operators (GTO) service but did not pay the service tax due. The Commissioner (Appeals) affirmed the demand made by the original authority through a Show Cause Notice. The main contention raised was regarding the applicability of Section 73 of the Finance Act, 1994 for recovery of service tax not paid in relation to GTO service and C&F Agents service. The consultant for the appellants argued that Section 73 did not provide for such recovery as assessees availing these services were required to file returns under Section 71A, and Section 73 did not cover recovery from such assessees. The consultant also cited a judgment of the Hon'ble Apex Court in support of this argument.

The Senior Departmental Representative (SDR) reiterated the findings of the impugned order and cited a previous Final Order in support. However, upon careful consideration, the Tribunal found that Section 73 did not encompass recovery of service tax from assessees required to file returns under Section 71A for GTO service and C&F Agents service. Therefore, the impugned order demanding service tax under Section 73 was deemed not sustainable, as rightly pointed out by the consultant for the appellants.

The Tribunal also referenced a previous case involving EID Parry (I) Ltd. where a refund claim was not admissible as the service tax was legitimately due and paid within the prescribed time limit. Additionally, the Tribunal highlighted a judgment of the Apex Court which supported the conclusion that Section 73 did not apply to assessees falling under Section 71A, as in the present case. By following the ratio of the cited judgment, the Tribunal concluded that the impugned order was not sustainable and allowed the appeal filed by M/s. Durairaj Mills Ltd.

In summary, the Tribunal granted relief to the appellants based on the interpretation of relevant sections of the Finance Act, 1994 and previous judgments, ultimately finding the impugned order unsustainable due to the specific provisions regarding recovery of service tax in the case of GTO service and C&F Agents service.