2004 (10) TMI 13 - AT - Service Tax

Service Tax Liability to pay Service recipient of Goods Transporters are not liable to service tax

Summary

Issues involved: Liability of service receiver for service tax on goods transport services post retrospective amendment in Finance Act, 2000.

Analysis:
The appeals in this case originated from the order of the Commissioner of Central Excise Vadodara, who reviewed the decision of the lower authority using the review powers granted under Section 84 of the Finance Act, 1994. The central issue at hand revolved around the liability of the service receiver, who had availed goods transport services, to pay service tax following a retrospective amendment introduced in the Finance Act, 2000 under Section 117. This section stipulated that certain clauses of the Service Tax Rules, 1994, should be deemed valid despite any prior judgment, decree, or order. The Commissioner revisited the case after the lower authority had halted proceedings based on a Supreme Court ruling in Laghu Udyog Bharati v. UOI, 1999, which stated that service tax collection from service receivers was not permissible under the prevailing law.

The crux of the matter was whether service tax could be levied on service receivers even after the enactment of Section 117 of the Finance Act, 2000. The Tribunal referred to its own decision in L.H. Sugar Factories Ltd. v. Commissioner of Central Excise, Meerut-II [2004 (165) E.L.T. 161 (Tri. - Del.)], where it was held that despite the retrospective effect of the Service Tax provisions, service tax could not be recovered from service receivers of goods transport services during a specific period. Relying on the precedent set in this case, the Tribunal allowed the appeals and overturned the Commissioner's order, thereby absolving the service receiver from the obligation to pay the service tax.