2015 (1) TMI 184 - AT - Service Tax

Liability of service tax - Recipient of service u/s Section 73 - Held that - Section 68 of the Finance Act, 1994, deals with persons liable to pay service tax. The demand for short levy or non-levy, if any, has to be made under Section 73 and not under Section 68. Therefore, the argument of the department that Section 68 has been amended retrospectively making the person receiving the service tax liable to service tax has no merits. Demand for short levy/non-levy, etc., if any, has to be made under Section 73 and during the relevant time Section 73 did not provide for demand of service tax from the persons who were recipients of the service. Therefore, the demand is unsustainable in law, in view of the decision of the Apex Court in the case of L.H. Sugar Factories Ltd 2005 (7) TMI 106 - SUPREME COURT OF INDIA . Accordingly, we do not find any merit in the appeal filed by the Revenue - Decided against Revenue.

Summary

Issues: Appeal against Order-in-Appeal No. BR/38/M-IV/2005 regarding demand of service tax under Section 73 of the Finance Act, 1994 from the recipient M/s. Ruby Mills Ltd. during the period 16-11-1997 to 1-6-1998.

Analysis:
1. The lower appellate authority set aside the demand of service tax against the respondent based on the absence of a provision for demanding service tax from recipients during the relevant period under Section 73 of the Finance Act, 1994. Citing the decision in the case of L.H. Sugar Factories Ltd., it was concluded that recipients were not required to file returns under Section 70 during that time, thus the demand was set aside.

2. The Revenue argued that the demand was made under Section 68, which was retrospectively amended by Section 128 of the Finance Act, 2003, making the recipient liable to pay service tax. However, the respondent contended that at the time of issuing the show-cause notice in October 2001, there was no provision for demanding short levy of service tax from recipients under Section 73. The decision in L.H. Sugar Factories Ltd. was cited to support this argument.

3. The Tribunal analyzed Section 68 of the Finance Act, 1994, which deals with persons liable to pay service tax, and clarified that demands for short levy or non-levy should be made under Section 73, not Section 68. It was emphasized that during the relevant period, Section 73 did not allow for demanding service tax from service recipients. Therefore, the retrospective amendment to Section 68 did not affect the demand in question. Relying on the precedent set by the Apex Court in L.H. Sugar Factories Ltd., the Tribunal dismissed the appeal, finding it unsustainable in law.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the Tribunal's reasoning behind dismissing the appeal filed by the Revenue.