2021 (10) TMI 302 - AT - Service Tax

Validity of SCN - demand of service tax on GTO/GTA services received by the appellant - reverse charge mechanism - Section 73 of FA - refund of service tax paid under protest which have been demanded vide the SCN pending adjudication - HELD THAT - The issue of levy of service tax on GTO service, on the receiver of service under reverse charge mechanism was held ultra virus by the Hon ble Supreme Court in the case of L. H. Sugar 2005 (7) TMI 106 - SC ORDER . It was categorically held that person required to file return under Section 71A of the Act was not covered under Section 73, as it stood on the date of issuance of the show cause notice. It is admitted fact that the appellant have taken service tax registration and are filing the periodical returns regularly. The appellant have maintained proper books of accounts in the normal course of business. Hon ble Supreme Court in case of Laghu Udyog Bharati 1999 (7) TMI 1 - SUPREME COURT , have held the provision of levy under reverse charge basis, as per Rule 2(1)(d) of the Service Tax Rules in the case of GTO service, as ultra virus the Finance Act, 1994. Accordingly, in these facts and circumstances and in view of the law pronounced by the Apex Court, it is held that the extended period of limitation cannot be invoked, as admittedly the show cause notice have been issued after the normal period of limitation. Further, whole proceedings and the show cause notice is ab initio void in view of the ruling of the Hon ble Supreme Court. The revenue is directed to grant refund of the amount of ₹ 43,89,613/- to the appellant (paid under protest) with interest @ 12% per annum for the period from 08.11.2003 till the date of payment, within a period of sixty days from the date of receipt/ service of the copy of the order - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Validity of show cause notice for service tax demand on GTO/GTA services.
2. Entitlement to refund of service tax paid under protest.

Analysis:

Issue 1: Validity of show cause notice
The appellant challenged the show cause notice dated 28.09.2001 raising a demand for service tax on GTO/GTA services. The notice was amended by a corrigendum on 03.11.2004. The Commissioner (Appeals) upheld the demand, rejecting the appellant's contention of being time-barred. The Tribunal referred to precedents like Mangalam Cement Limited and Pandurang SSK Ltd., upholding liability even for notices issued after 10.09.2004. The Gujarat High Court in Emco Elecon Ltd. and Madras High Court in L&T & Others supported the validity of revised notices issued within a year from the relevant date. The Commissioner (Appeals) found the notice validly issued within the prescribed period, not barred by limitation.

Issue 2: Entitlement to refund
The appellant sought a refund of the service tax paid under protest. The Commissioner (Appeals) denied the refund. The appellant argued the issue was settled in their favor by various judgments. The Tribunal noted the ruling in CCE, Meerut vs. L.H. Sugar Factories Ltd., emphasizing that the person required to file a return under Section 71A was not covered under Section 73. The Tribunal cited the decision in Agauta Sugar Chemical, where similar issues were decided in favor of the assessee. The Tribunal found that the corrigenda to the original notice could not revive an invalid notice. The extended period of limitation was deemed inapplicable without contumacious conduct, misstatement, or fraud. The Tribunal directed the revenue to refund the amount paid under protest with interest, as the show cause notice was considered void based on the Supreme Court's rulings.

In conclusion, the Tribunal allowed both appeals, setting aside the impugned orders and directing the revenue to grant the refund with interest.