2014 (10) TMI 344 - AT - Service Tax

GTA service - Restospective amendment to file returns under Section 71A - Held that - demand has been confirmed under Section 73 of the Finance Act. At the relevant time, demand under Section 73 could be made only from persons filing the returns under Section 70. In the case of service recipient, the requirement of filing returns was introduced under Section 71A by Finance Act, 2003, retrospectively. And thereafter Section 73 was amended vide Finance Act, 2004, with effect from 10-9-2004 which provided for demand of Service Tax and confirmation thereof under Section 73. In the present case, the show-cause notice was issued in November 2002 and at that time, Section 73 did not provide for demand of Service Tax from recipients of service. In view of the above, the demand and its confirmation are not sustainable in law - Decided in favour of assessee.

Summary

Issues:
1. Liability of the appellant to pay Service Tax as a recipient of service.
2. Validity of the demand notice issued by the Revenue.
3. Interpretation of Sections 70, 71A, and 73 of the Finance Act, 1994.

Analysis:
1. The appellant received GTA service and paid a freight amounting to &8377; 68,19,708. The Revenue demanded Service Tax of &8377; 3,40,985 along with interest and penalties. The lower appellate authority upheld the demand, which the appellant contested, arguing that they were not liable to pay Service Tax as a recipient of the service during the relevant period. The appellant claimed that they were not required to file returns at that time, as the law was amended retrospectively in 2003. The appellant contended that the demand was not sustainable in law, and hence, appealed against it.

2. The Revenue, represented by the Additional Commissioner, supported the findings of the lower authorities but acknowledged that the issue favored the assessee. Referring to various decisions of the Tribunal and the judgment in L.H. Sugar Factories case, it was conceded that the demand and confirmation of Service Tax were not valid. The Tribunal considered the submissions and records, noting that the demand was confirmed under Section 73 of the Finance Act, which at the relevant time only allowed demands from persons filing returns under Section 70. The requirement for service recipients to file returns was introduced under Section 71A in 2003, retrospectively. Subsequently, Section 73 was amended in 2004 to provide for the demand and confirmation of Service Tax. As the show-cause notice was issued before these amendments, the demand and confirmation were deemed unsustainable in law. Consequently, the appeal was allowed with any necessary consequential relief as per the law.