2006 (4) TMI 116 - AT - Service Tax

Services of goods transport operators - period from 16-7-1997 to 16-10-1998 - recipients of services of the GTO were not covered by Finance Act for the period in question. After the amendment of the Finance Act, bringing in such services with the net of Service Tax retrospectively, the demands have been raised - In view of judgment in L.H. Sugar Factories Ltd, demands are not sustainable as it has been held that the SCN should have been issued prior to the amendment by the Finance Act

Summary

Issues Involved:
Challenge to demands raised for services of goods transport operators for a specific period before the amendment of Finance Act to cover such services retrospectively.

Analysis:
The judgment by the Appellate Tribunal CESTAT, Bangalore addressed the issue of demands raised for services of goods transport operators for a period before the retrospective coverage under the Finance Act. The appellant argued that as they were not issued a show-cause notice before the retrospective amendment, the demands were not sustainable. The appellant relied on the Tribunal ruling in the case of L.H. Sugar Factories Ltd, emphasizing that demands are unsustainable if no show-cause notice was issued before the amendment. The Tribunal also considered the Apex Court judgment in Laghu Udyog Bharati v. Union of India, supporting the appellant's argument.

The Tribunal noted that the recipients of the services were not covered by the Finance Act for the relevant period. Subsequent to the retrospective inclusion of such services under the Finance Act, demands were raised. The Tribunal agreed with the appellant's contention, supported by the judgments cited, that demands were not sustainable due to the absence of a pre-amendment show-cause notice. The Tribunal found the cited rulings directly applicable to the case, leading to the conclusion that the demands should be set aside. Consequently, the Tribunal allowed the stay application and the appeal, providing consequential relief based on the judgments referenced in the case.

In summary, the judgment highlighted the importance of issuing show-cause notices before retrospective amendments to the Finance Act covering specific services. The Tribunal's decision was influenced by previous rulings emphasizing the need for procedural compliance in raising demands for services retrospectively brought under the tax net. The appellant's argument, supported by relevant case law, led to the allowance of the appeal and the setting aside of the unsustainable demands.