2017 (6) TMI 861 - AT - Service Tax

Good Transport Operator Service - Effect of retrospective validation of service tax on GTA services for the period prior to 1-6-1998 - reverse charge mechanism - The appellant has already deposited the entire amount of tax - recovery of interest and penalties - Held that - The Hon ble Supreme Court n the case of Commissioner of Central Excise, Baroda Vs. Gujrat Carbon & Industries Ltd. 2008 (8) TMI 4 - SUPREME COURT held that the liability to file return is cast on the assessee only under Section 71A which was introduced in the Finance Bill, 2003 - Thus, during the period in question no notice could have been issued under Section 73 for non filing or the return under Section 70 as there was no requirement for filing of return by the service Recover. Hence, demand of interest and penalty cannot be sustained - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
Demand of Service Tax for the period 16.11.1997 to 01.06.1998 in respect of service under the category of 'Good Transport Operator Service'; Validity of demand of interest and penalty; Interpretation of Sections 71A, 73, and 70 of the Finance Act, 1994.

Analysis:

Issue 1: Demand of Service Tax
The case involved a demand for Service Tax for a specific period related to the 'Good Transport Operator Service.' The Adjudicating Authority confirmed the demand under Section 73(1) read with Section 68 of the Finance Act, 1994. The Commissioner (Appeals) upheld the Adjudication order. The appellant had already paid the entire tax amount. However, the appellant contested the demand of interest and penalty.

Issue 2: Interpretation of Relevant Provisions
The appellant cited the Hon'ble Supreme Court's decision in Laghu Udyog Bharti case, which struck down the provisions of payment of Service tax on GTO under Reverse Charge Mechanism. The introduction of clauses in subsequent Finance Acts reinstated the taxability of GTO service under reverse charge mechanism for the interim period in question. The Tribunal's decision in L.H. Sugar Factories Ltd. case, upheld by the Supreme Court, clarified the scope of Sections 71A and 73, indicating that the liability to file a return was introduced later in the Finance Act, 2003.

Issue 3: Demand of Interest and Penalty
The lower authorities relied on a Supreme Court decision validating retrospective levy under specific sections of the Finance Acts. However, the appellant argued that during the relevant period, no notice could have been issued under Section 73 for non-filing of return under Section 70, as the requirement for filing a return by the service receiver was not in place. Therefore, the demand for interest and penalty was deemed unsustainable based on the absence of a legal obligation to file the return.

Conclusion
The Tribunal, considering the interpretations of relevant provisions and precedents, set aside the demand for interest and penalty. The appeal was allowed, emphasizing the absence of a legal requirement for the service receiver to file a return during the period in question. The decision highlighted the specific legal framework and historical context to reach a fair judgment.

This comprehensive analysis of the judgment covers the issues involved in detail, providing a clear understanding of the legal reasoning and interpretations applied in the case.