2002 (12) TMI 1 - AT - Service Tax

Service Tax Service provided by goods transport operator in relation to carriage of goods (1) Registration and Returns (2) Demand

Summary

Issues Involved:
1. Imposition of Service Tax on services provided by goods transport operators.
2. Retrospective amendment of Service Tax Rules by Section 117 of the Finance Act, 2000.
3. Validity of Rule 2(1)(d)(xvii) of the Service Tax Rules, 1994.
4. Liability for registration and filing of returns under Sections 69 and 70 of the Finance Act, 1994.
5. Applicability of Section 117 of the Finance Act, 2000 for recovery of service tax.
6. Validity of show cause notices issued under Sections 76, 77, and 79 of the Finance Act, 1994.
7. Interpretation of Section 73 of the Finance Act, 1994 regarding issuance of show cause notices.

Detailed Analysis:

1. Imposition of Service Tax on services provided by goods transport operators:
The core issue revolves around the imposition of Service Tax on services provided by goods transport operators from 16-11-1997 to 1-6-1998. The appellants were required to pay service tax for the services availed during this period as they had neither registered with the Central Excise authorities nor paid the service tax, thus contravening Sections 68 and 70 of the Finance Act, 1994. The show cause notices also proposed recovery of interest for delayed payment and penal action under Sections 76, 77, and 79 of the Finance Act, 1994.

2. Retrospective amendment of Service Tax Rules by Section 117 of the Finance Act, 2000:
The retrospective amendment of Service Tax Rules by Section 117 of the Finance Act, 2000, validated the levy and collection of service tax on services rendered by goods transport operators. This amendment was made notwithstanding any judgment, decree, or order of any Court, Tribunal, or other authority. The Commissioner of Central Excise issued notices for revision of the Deputy Commissioner's orders in light of this retrospective amendment, directing the appellants to work out the tax payable and pay the same along with interest.

3. Validity of Rule 2(1)(d)(xvii) of the Service Tax Rules, 1994:
The validity of Rule 2(1)(d)(xvii) was challenged and quashed by the Supreme Court in the case of Laghu Udyog Bharti v. Union of India, declaring the Rule ultra vires. Consequently, the Deputy Commissioner dropped the show cause notices. However, the retrospective amendment by Section 117 of the Finance Act, 2000, reinstated the validity of the Rule, thus requiring the appellants to comply with the service tax obligations.

4. Liability for registration and filing of returns under Sections 69 and 70 of the Finance Act, 1994:
The appellants contended that Sections 69 and 70 were to be complied with only by the service provider and not by the service receiver. However, the Tribunal clarified that the person responsible for collecting the service tax, as defined in Rule 2(1)(d)(xvii), includes the service receiver who pays or is liable to pay the freight. Therefore, the appellants were liable to apply for registration and file returns.

5. Applicability of Section 117 of the Finance Act, 2000 for recovery of service tax:
The Tribunal referred to the decision in Apollo Tyres Ltd. v. CCE, which held that Section 117 of the Finance Act, 2000, validates any action taken or anything done during the specified period and provides for recovery of service tax refunded in pursuance of any judgment or order. The argument that Section 117 only validates collections already made and does not authorize recovery of tax was rejected.

6. Validity of show cause notices issued under Sections 76, 77, and 79 of the Finance Act, 1994:
The Tribunal noted that the show cause notices were issued under Sections 76, 77, and 79 for non-compliance with registration and filing of returns, but not under Section 73 for non-payment of service tax. This distinction was crucial in determining the validity of the notices and the subsequent orders for recovery of service tax.

7. Interpretation of Section 73 of the Finance Act, 1994 regarding issuance of show cause notices:
The Tribunal referred to the decision in Markfed Oil & Allied Industries v. CCE, which held that a show cause notice must be issued under Section 73 for recovery of service tax if the value of taxable service has escaped assessment due to omission or failure to file returns. Since the notices in the present cases were issued only under Sections 76, 77, and 79, and not under Section 73, the Tribunal set aside the impugned orders-in-revision and allowed the appeals.

Conclusion:
The appellants were held liable to apply for registration and file returns. However, the demand for service tax was set aside due to the lack of proper show cause notices under Section 73 of the Finance Act, 1994. The appeals were allowed, and the impugned orders-in-revision were set aside.