2007 (12) TMI 154 - AT - Service Tax

Respondent received goods transport services during the period 16-11-1997 to 1-6-1998 non-payment of tax - Commissioner (Appeals) relied on the decision of the Tribunal in the case of L.H. Sugar Factories Ltd. v. CCE, which was affirmed by SC and held that there was no provision u/s 73 to demand service tax from the persons who were liable to file return u/s 71(1) and who had failed to pay tax by the due date impugned order is justified revenue s appeal is liable to be dismissed

Summary

Issues:
Department's appeal against Commissioner (Appeals) order dated 28-12-2006 - Demand of duty under section 68 of Finance Act, 1994 - Recovery of interest under section 75 - Imposition of penalty - Interpretation of section 73 for service tax demand - Amendments in section 73 post-2004 - Liability of recipients of goods transport services to pay service tax - Applicability of section 71A and section 73 - Judicial precedents regarding the liability of recipients for service tax - Comparison with decisions in L.H. Sugar Factories Ltd. case and Tamil Nadu Cements Corpn. Ltd. case.

Analysis:
The case involved a dispute over the demand of duty, interest, and penalty for goods transport services received by the respondent between 16-11-1997 and 1-6-1998. The original authority confirmed the duty demand, interest recovery, and penalty imposition, which was subsequently appealed by the respondent. The Commissioner (Appeals) allowed the appeal based on the absence of a provision under section 73 to demand service tax from those liable to file returns under section 71(1) but failed to pay tax by the due date. The Department argued that amendments in section 73 from 2004 allowed for duty recovery within one year from the amendment date, justifying the demand. The respondent contended that service tax rules were held ultra vires by the Supreme Court initially, with subsequent amendments enabling recovery from recipients as deemed service providers. The respondent relied on the decision in L.H. Sugar Factories Ltd. case and Tamil Nadu Cements Corpn. Ltd. case to support their argument against the applicability of section 73 to recipients under section 71A.

The respondent emphasized that the amendments in 2000, 2003, and 2004 aimed to align service tax recovery with Central Excise Act provisions, excluding recipients under section 71A from section 73's purview. Citing judicial precedents, the respondent argued that persons under section 71A were not subject to section 73, as established in the L.H. Sugar Factories Ltd. case and upheld by the Supreme Court. The Tribunal's decision in Tamil Nadu Cements Corpn. Ltd. case further supported the non-maintainability of show-cause notices under section 73 for such recipients. The Tribunal noted similarities between the present case and the cited precedents, rejecting the appeal based on the consistent interpretation of section 73 in line with the decisions in L.H. Sugar Factories Ltd. case and Tamil Nadu Cements Corpn. Ltd. case. The Tribunal found the appeal unsubstantiated in light of the legal arguments and precedents presented by both sides, ultimately upholding the Commissioner (Appeals) decision in favor of the respondent.