2008 (3) TMI 178 - AT - Service Tax

Appellant s contention is that the service taker of C&F Agents service was not liable to discharge service tax for the period 16-7-1997 to 31-8-1999 (material period) as per Notification No. 7/99-S.T. dated 23-8-1999, the liability to pay the service tax was shifted to Clearing and Forwarding Agents. Therefore, upto 31-8-1999, the service receivers had to pay the service tax in respect of commission paid to C&F Agents refund rightly denied assessee s appeal dismissed

Summary

Issues:
1. Liability of service tax on service taker for clearing and forwarding agents service.
2. Validity of orders confirming demand of service tax and rejecting refund claim.

Analysis:
1. The appeals were filed by M/s. Rajashree Cements challenging the demand of service tax and rejection of refund claim related to clearing and forwarding agents service. The main argument was based on the judgment of the Hon'ble Apex Court in Laghu Udyog Bharati v. UOI, which held that only the service provider, not the service taker, was liable to pay the tax. The appellants contended that this ruling applied even beyond 16-10-1998, covering the material period in both appeals. They argued that the Finance Act, 2000 revalidated the provisions quashed by the Apex Court only for a specific period, and the service taker was not liable to pay service tax during the material period.

2. The Tribunal noted that Section 117 of the Finance Act, 2000 validated actions under the Service Tax Rules, 1994 until the date of receiving assent from the President. Notification No. 54/98-S.T. dated 7-10-1998 introduced amendments making service receivers liable to pay service tax for commission paid to clearing and forwarding agents until 31-8-1999. Subsequently, Notification No. 7/99-S.T. dated 23-8-1999 shifted the liability to pay service tax to the agents. Therefore, during the material period, service receivers were obligated to pay the service tax for C&F Agents services.

3. The Tribunal, after hearing the arguments and considering the legal provisions, upheld the orders confirming the demand of service tax and rejecting the refund claim. It was concluded that the impugned orders were passed in accordance with the law, and the appeals lacked merit. Both appeals were dismissed based on the legal position discussed above.

This comprehensive analysis of the judgment highlights the key issues of liability for service tax on the service taker and the validity of the orders in question, providing a detailed overview of the legal reasoning and conclusions reached by the Tribunal.