2011 (2) TMI 979 - AT - Service Tax

Demand of Service Tax - Notice under section 73A - GTA Services - Held that - Show-cause notice dated 21-5-2004 was issued to the respondent for demand of Service Tax to pay Service Tax on Goods Transporter Service for the period 1-2-1998 to 1-6-1998 under section 73A of the Finance Act 1994 which was on the similar facts as in the case of CCE v. L.H. Sugar Factories Ltd. 2005 (7) TMI 106 - SUPREME COURT OF INDIA wherein held that the show-cause notice is not maintainable - Decided in favour of assessee.

Summary

Issues:
Appeal against demand of Service Tax on Goods Transporter Service under section 73A of the Finance Act, 1994 for the period 1-2-1998 to 1-6-1998. Interpretation of the applicability of section 73 in light of section 71A.

Analysis:

1. The Revenue issued a show-cause notice to the respondent for the demand of Service Tax on Goods Transporter Service under section 73A of the Finance Act, 1994. The demands were confirmed initially, but on appeal, the lower appellate authority set aside the demand citing the decision in the case of CCE v. L.H. Sugar Factories Ltd. The Revenue, aggrieved by this decision, filed an appeal.

2. The Revenue reiterated the grounds of appeal, while the Advocate for the respondent pointed out that the Tribunal and the Hon'ble Gujarat High Court had decided in favor of the appellant in similar cases.

3. The Tribunal referred to the case of L.H. Sugar Factories Ltd., where the Hon'ble Apex Court observed that section 73 only applies to assessees liable to file a return under section 70. Since the liability to file a return is under section 71A, those falling under this category are not covered by section 73. Therefore, show-cause notices invoking section 73 are not maintainable.

4. In the case of CCE v. Eimco Elecon Ltd., the Hon'ble High Court of Gujarat held that until the introduction of section 71A by the Finance Act, 2003, the liability to pay Service Tax was on the service provider, not the recipient. The retrospective introduction of section 71A did not make the provisions of section 73 applicable until its substitution in 2004. The Court emphasized that the language of the statute did not clearly hold the respondent-assessee at fault for non-compliance.

5. The Tribunal found that the show-cause notice issued in this case in 2004 for the period 1998 was similar to the facts in the L.H. Sugar Factories Ltd. case. Following the precedent, the Tribunal held that the show-cause notice was not maintainable. Therefore, the appeal filed by the Revenue was rejected based on the lack of merit in light of the legal interpretations provided by the higher courts.