2012 (5) TMI 372 - AT - Service Tax

Demand of service tax - Clearing and Forwarding services received - Commissioner (Appeals) has taken a view that the demand is not sustainable since the show cause notice was issued under Section 73 of Finance Act, 1994 and on the day on which show cause notice was issued, the Section 73 was not applicable in respect of short levy arising in respect of the ST - 3 returns filed under Section 71A Held that - if provisions of section 71A are not incorporated under section 73, no demand can be raised for the violation of the same, the liability does not arise and demands cannot be sustained. provisions of Section 73 of the Finance Act, 1994 were amended from 10.09.2004 by incorporating violation of Section 71A, for issuance of show cause notice. show cause notice has been issued on 19.05.2004, i.e., prior to amendment of Section 73. appeal filed by the revenue rejected

Summary

Issues:
Recovery of Service Tax on Clearing and Forwarding services; Applicability of Section 73 of Finance Act, 1994; Validity of show cause notice issued in April 2004; Interpretation of relevant judicial pronouncements regarding Section 71A and Section 73.

Analysis:
The Appellate Tribunal CESTAT, Bangalore dealt with a case involving the recovery of Service Tax on Clearing and Forwarding services received by an assessee during a specific period. The proceedings were initiated through a show cause notice issued in April 2004, seeking recovery of Rs. 4,96,356. The Commissioner (Appeals) initially ruled in favor of the assessee, stating that the demand was not sustainable under Section 73 of the Finance Act, 1994, as it was not applicable at the time of issuing the notice. The Revenue appealed this decision, arguing that subsequent amendments and judicial interpretations supported their claim.

The Revenue contended that a decision by the Hon'ble Supreme Court in a related case had been confirmed, albeit as a short order. A subsequent detailed argument before the Apex Court in another case led to the admission of an appeal. Furthermore, Section 73 was amended to include Section 71A on 10.09.2004, which the Revenue highlighted as crucial in the context of the present case.

Conversely, the respondents' counsel relied on the Hon'ble Supreme Court's decision in a specific case, emphasizing its applicability to the current scenario. They distinguished another Tribunal decision based on the timing of the show cause notice issuance concerning the amendment of Section 73. The Tribunal carefully considered these arguments and relevant judicial pronouncements to determine the sustainability of the show cause notice issued in April 2004.

The Tribunal referenced the observations made by the Hon'ble Supreme Court in a previous case, emphasizing the importance of aligning the provisions of Section 73 with the obligations under Section 71A. Drawing parallels with similar cases, the Tribunal reiterated the significance of retrospective amendments and the implications for demand notices issued prior to such changes. Citing precedents and judicial interpretations, the Tribunal concluded that the impugned order was not sustainable and set it aside, following established legal principles and decisions.

In conclusion, the Tribunal dismissed the Revenue's appeal, emphasizing the adherence to legal precedents and the interpretation of relevant statutory provisions. The judgment highlighted the significance of timing in relation to legislative amendments and judicial pronouncements, ultimately upholding the principles established in previous cases to determine the validity of the show cause notice in question.