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2018 (2) TMI 1030 - AT - Service TaxC&F Services - recipient of service - reverse charge mechanism - Held that - It is not in dispute that the show cause notice has been issued to all the appellants for recovery of service tax under Section 73 of the Finance Act, 1994. The issue of demand of service tax under Section 73 was adjudicated and demands confirmed relying upon retrospective amendments to Finance Act, 1994. A Division Bench of this Tribunal in the case of L.H. Sugar Factory 2004 (1) TMI 111 - CESTAT, NEW DELHI in an identical issue ruled in favour of the assessee. Appeal allowed - decided in favor of appellant.
Issues:
Appeal against Order-in-Appeal No. 154-06ST dated 25/10/2006 regarding service tax demand on Clearing & Forwarding services during 16/07/1997 to 31/08/1999. Interpretation of retrospective amendments to Finance Act, 1994. Applicability of service tax on reverse charge basis for C&F agents. Analysis: The appeal was filed against the Order-in-Appeal No. 154-06ST dated 25/10/2006 concerning a service tax demand of ? 28,93,767/- on Clearing & Forwarding services provided by business concerns to the appellant between 16/07/1997 to 31/08/1999. The dispute revolved around the leviability of service tax on reverse charge basis for the appellant, who was the recipient of such services. The Hon'ble Supreme Court's decision in Laghu Udyog Bharati Vs. UOI [1998(112) ELT 365 (SC)] was pivotal, setting aside the levy of service tax on reverse charge basis. Subsequent retrospective amendments to the Finance Act, 1994, introduced Section 71A for recipients to file returns within 6 months and pay service tax on reverse charge basis. The present case stemmed from a show-cause notice by the Revenue, leading to the confirmation of service tax by the authorities below, prompting the appellant to file the current appeal. The appellant's counsel contended that the issue was settled by the Hon'ble Supreme Court in L.H. Sugar Factories Ltd. Vs. CCE, Meerut-II [2006(3) ELT 715 (SC)], where the Tribunal's decision was upheld. The Revenue, represented by the learned AR, supported the impugned order. Upon considering both sides' submissions and reviewing the record, it was noted that the show-cause notice was issued for service tax recovery under Section 73 of the Finance Act, 1994. The demands were confirmed based on retrospective amendments to the Act. Citing the Tribunal's decision in L.H. Sugar Factory case, which ruled in favor of the assessee, the Tribunal concurred with the Apex Court's observation that Section 73 only applies to assessees liable to file returns under Section 70, not those under Section 71A. Consequently, the Tribunal dismissed the appeals, agreeing with the settled issue by the Supreme Court, thereby setting aside the impugned order and allowing the appeal. In conclusion, the Tribunal's decision was based on the settled legal position established by the Hon'ble Supreme Court, emphasizing the inapplicability of Section 73 to assessees under Section 71A. The dismissal of the appeals and setting aside of the impugned order reflected the adherence to established legal precedents in matters of service tax on reverse charge basis for C&F agents, providing clarity on the retrospective amendments to the Finance Act, 1994.
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