2008 (12) TMI 108 - AT - Service Tax

Liability of the appellants as recipient of service tax of transportation of goods by road during the period from 16-11-1997 to 1-6-1998 and services of clearing and forwarding agent from 16-7-1997 to 15-10-1998 non fulfillment of requirement by assessee to file return and pay tax before 13.11.03 as required u/s 158 of Finance Act, 2003 since department was aware of requirement and assessee fully co-operated with department in giving details, SCN issued on 24.7.06 is held as time barred

Summary

Issues:
Liability of the appellants as recipient of service tax of transportation of goods by road and services of clearing and forwarding agent during specific periods. Whether the service tax demand is barred by limitation due to failure to file returns and pay taxes.

Analysis:
1. The issue in this appeal pertains to the liability of the appellants for service tax on transportation of goods by road and clearing and forwarding agent services during specific periods. The service tax demand was confirmed against the appellant for not filing returns and paying taxes as required by the Finance Act, 2003. The revenue argued that the extended period for issuing show-cause notice is applicable due to the appellant's non-compliance with tax payment obligations.

2. The appellant's representative cited various judgments, including the decision of the Hon'ble Supreme Court in CCE v. Gujarat Carbon & Industries Ltd., to support their case. On the other hand, the revenue relied on legal precedents related to the Finance Act, 2003, emphasizing the requirement for filing returns and paying taxes within specified deadlines. The revenue highlighted the Constitutional validity of section 71A of the Finance Act, 2003, as upheld in previous court decisions.

3. The Tribunal analyzed the submissions and referred to the Supreme Court's judgment in Gujarat Carbon & Industries Ltd., which upheld the constitutional validity of section 71A of the Finance Act, 2003. The Tribunal emphasized that actions taken before the introduction of this section were not sustainable. Citing the decision in Mangalam Cement Ltd.'s case, the Tribunal clarified that show-cause notices issued post the enactment of the Finance Act, 2003, must be assessed in accordance with section 71A, which mandated timely filing of service tax returns.

4. Despite the appellant's failure to file returns and pay taxes, the Tribunal noted that there was no evidence of intent to evade duty payment. Both the appellants and the revenue were aware of the legal requirements, and there was no indication of non-cooperation from the appellants in providing necessary details. As a result, the Tribunal concluded that the show-cause notice was barred by limitation, as the department was aware of the situation and there was no evidence of deliberate tax evasion.

5. The Tribunal allowed the appeal in favor of the appellants, considering the lack of evidence indicating an intent to evade tax payment and the awareness of both parties regarding the legal obligations. Consequently, the appellants were granted consequential relief in the matter.