Service Tax — Clearing & Forwarding Agents and Goods Transport Operators — Supreme Court Judgment in W.P. No. 53/98 in case of M/s. Laghu Udyog Bharati v. U.O.I. - Service Tax - Trade Notice No. 93/99 - Madurai

Further to this office Trade Notice No. 85/99 (4/Service Tax/99), dated 27-8-1999 [See 1999 (112) E.L.T. T51], the following information/guidelines are issued for the convenience of the assessees concerned and the general Trade as well in respect of the above said two services. (i) The levy of Service Tax on Goods Transport Operators and Clearing and Forwarding Agents was initially imposed on the Service providers, i.e. Goods Transport Operator and Clearing Forwarding Agents, in the Budget 1997. However, the said levy was transferred to user, after introduction of sub-rule (xii) under Notification No. 27/97 , dated 16-7-1997 for Clearing and Forwarding Agents, and sub-rule (xvii) of Rule 2(d) of Service Tax Rules under Notification No. 42/97, dated 5-11-1997 in respect of Goods Transport Operators.[ Notification Nos. 27/97 and 42/97 were communicated vide this office Trade Notice No. 87/97(10/Service Tax/97), dated 14-7-1997 and Trade Notice No. 144/97(18/Service Tax/97), dated 11-11-1997 respectively]. The effect of these two notifications making the receivers of Service as being liable to pay the tax has been set at nought by the Hon ble Supreme Court who have held that the levy of tax from the receiver was illegal. Hence the refund. (ii) The provisions of Section 11B of the Central Excise Act, 1944 will regulate all the refund claims arising in relation to the Service Tax matters. Therefore, all the assessees or the persons who intend to file the refund claim in view of the captioned judgment of the Hon ble Supreme Court are required to file a regular refund claim in Prescribed Form R . Such refund claims should be filed within 6 months from the date of judgment of Supreme Court which is 27th July, 1999 which would be the relevant date for the purpose. (iii) All such refund claims, if filed within time, are required to be finalised within 12 weeks from the date of filing and the amount duly worked out and verified should be effectively refunded to the claimant or the consumer welfare fund, as the case may be, within such 12 weeks. (iv) The Government of India under Notification No. 49/98, dated 2-6-1998 had exempted the levy of Service Tax on Goods Transport Operators, among other enumerated services. Therefore, the refund claims shall not arise in respect of the services received with effect from 2-6-1998, so far as, Goods Transport Operators are concerned. (v) However, since the said exemption notification does not encompass the services provided by the Clearing Forwarding Agents, the users of this service have been paying Service Tax, till date. In view of the above judgment of Hon ble Supreme Court, refund claims may be filed by those who had availed themselves of Clearing and Agents and Goods Transport Operators to be illegal. The Court has only struck down those provisions in the Service Tax Rules, 1994 which had shifted in 1997 the burden of levy and collection of tax from the Service Provider to Service Receiver. In case of any difficulty or for any clarification you are requested to contact the jurisdictional Supreintendent of Central Excise or the Deputy/Assistant Commissioner of Central Excise in charge of Central Excise Divisions or the Service Tax Unit of this office or the undersigned.