2003 (1) TMI 177 - AT - Central Excise

Summary

Issues:
1. Validity of the refund of Service Tax to transporters following the quashing of certain Service Tax Rules.
2. Recovery of the refunded Service Tax from the transporters after retrospective validation of the rules.

Issue 1:
The case involved the validity of the refund of Service Tax to transporters following the quashing of certain Service Tax Rules. The Finance Act, 1997 imposed a Service Tax on Goods Transport Operators, but a notification restricted the liability to pay the tax on the users of the services. M/s. TISCO filed a refund application for the Service Tax paid, which they deducted from the transporters against their bills. The Deputy Commissioner sanctioned the refund claims to the transporters. However, the Finance Act, 2000 validated the collection of Service Tax rules with retrospective effect, leading to a show cause notice issued to the transporters for setting aside the refund order. The transporters argued that the liability should be on M/s. TISCO, who received the services and deducted the tax, but the adjudicating authority confirmed the demands of Service Tax refunded to the transporters.

Issue 2:
The second issue revolved around the recovery of the refunded Service Tax from the transporters after the retrospective validation of the rules. The transporters contended that since M/s. TISCO deducted the tax from their freight bills, the refund should be recovered from M/s. TISCO and not from them. However, the Tribunal held that the refund was granted to the transporters directly by the Revenue, not to M/s. TISCO, and therefore, the recovery should be from the transporters. The Tribunal emphasized that it was not a case of non-payment by M/s. TISCO but a recovery of an erroneous refund, which had to be repaid by the recipient. The Tribunal rejected the transporters' plea, stating that the recovery should be from M/s. TISCO, as the refund was granted to the transporters directly, and they had consented to it.

In conclusion, the Tribunal found no merit in the transporters' appeal and rejected it, affirming the recovery of the refunded Service Tax from the transporters based on the retrospective validation of the Service Tax rules.