2008 (3) TMI 125 - AT - Service Tax

Goods Transport Operators Service (GTO service) during the period from 16.11.1997 to 1.6.1998 demand u/s 73 & penalty for non filing return - held that a person receiving taxable service from GTO/C&F Agent was not covered by provisions of Sec. 70 & 73 - class of persons who come under Section 71A is not brought under the net of Section 73 - SCN issued to the appellants invoking Section 73 are not maintainable

Summary

Issues:
Waiver of predeposit and stay of recovery of service tax under Sections 71A and 73 of the Finance Act, 1994.

Analysis:

1. Waiver of Predeposit and Stay of Recovery:
The appeal before the Appellate Tribunal CESTAT Chennai involved an application by M/s. Rajarathinam Fire Works Industries seeking waiver of predeposit and stay of recovery of service tax amounting to Rs.24,547 for availing Goods Transport Operators Service (GTO service) during a specific period. The original authority initially dropped the proceedings for demanding the tax, but the Commissioner revised the orders and confirmed the demand under Section 73 read with Section 71A of the Finance Act, 1994.

2. Legal Arguments and Considerations:
During the hearing, the consultant for the appellant argued that the demand confirmed under Section 71A was not sustainable as the show-cause notice did not invoke this section, contrary to the judgment of the Supreme Court in a specific case. The consultant also highlighted that the Commissioner relied on a stay order from a Single Member of the Tribunal, which did not align with the legal position established by the apex court. On review of the case records and submissions, the Tribunal agreed with the appellant's contention that the demand under Section 71A was not legally valid due to the absence of its invocation in the show-cause notice.

3. Interpretation of Legal Provisions:
The Commissioner based the impugned order on a previous Tribunal decision that authorized the recovery of service tax from GTO service availers under Section 71A, even if Section 73 did not apply directly. The Commissioner's interpretation involved a harmonious reading of Sections 68, 71, 71A, and 73 to justify invoking Section 73 for demanding unpaid service tax covered under Section 71A. However, the Tribunal found this interpretation conflicting with the Supreme Court's judgment in a similar case, which emphasized the limited applicability of Section 73 to assessees filing returns under Section 70, not Section 71A.

4. Binding Precedent and Conclusion:
The Tribunal referred to the Supreme Court's decision in the CCE Meerut-II Vs. LH Sugar Factories case, where the apex court dismissed appeals against a Tribunal order that restricted the application of Section 73 to assessees under Section 70, excluding those under Section 71A. Citing this binding ratio, the Tribunal concluded that the impugned order, which relied on a Tribunal decision contrary to the Supreme Court's interpretation, could not be sustained. Consequently, the stay application was dismissed, and the appeal was allowed based on the established legal precedent.

In summary, the judgment by the Appellate Tribunal CESTAT Chennai addressed the issues of waiver of predeposit and stay of recovery of service tax under Sections 71A and 73 of the Finance Act, 1994. Through a detailed analysis of legal arguments, interpretations of provisions, and reliance on binding precedents, the Tribunal ruled in favor of the appellant, emphasizing the correct application of legal provisions as per Supreme Court judgments.