Full Judgment
a) The respondent received goods transport services during the period 16.11.97 to 1.6.98. A show cause notice dated 23.7.04 seeking to demand duty in terms of Section 68 of the Finance Act, 1994 read with Section 73(1)(a) was issued.
b) The original authority by his order dated 20.4.05 confirmed the demand of duty; ordered recovery of interest in terms of Section 75 of the Finance Act, 1994. He also imposed penalty under various sections.
c) The Commissioner (Appeals) allowed the appeal by the party on the ground that there was no provision under Section 73 to demand service tax from the persons who were liable to file return under Section 71(1) and who had failed to pay tax by the due date. For this purpose, he relied on the decision of the Tribunal in the case of L.H. Sugar Factories Ltd. v. C.C.E., Surat II 4. Learned DR submits that Section 73 has been amended with effect from 10^th September 2004 and show cause notice for recovery of the duty could be issued from one year from that date. Since show cause notice was already issued on 23^rd July 2004, the duty was rightly demandable.
He relies on the decision of the Tribunal in the case of C.C.E., Jaipur v. Mangalam Cement Ltd. reported in 2007 - TIOL - 906 (CESTAT - Del).
a) The service tax on goods transport agency was introduced in 1997 and the rules under which the tax was sought to be recovered from the recipient was held ultravires by the Hon'ble Supreme Court in the case of Laghu Udyog Bharati v. UOI .
b) Subsequently, amendments were made in the service tax laws in 2000 and 2003 which enabled recovery of service tax from the recipient of service by treating them as deemed service providers.
The amendment to Section 73 in 2004 introduced with effect from 10.9.04 is a general amendment bringing the demand of short-levy, short-paid of service tax on par with the provisions of Section 11A of the Central Excise Act.
c) Even after amendment in 2003, no show cause notice could be issued as they have not filed any return under Section 71(1)(a).
d) Section 73 is not attracted in respect of persons who are required to file return under Section 71(1)(a). He relies on the decision in the case of C.C.E., Meerut II v. L.H. Sugar Factories Ltd. reported in 2005 (187) ELT 5 (SC) and submits that the said decision has been taken into account the amendments by the Finance Act, 2000 as well as amendment by Finance Act, 2003 and came to the conclusion as follows: 8. In view of the above provision, the appellants are deemed to be persons liable to pay service tax and shall pay service tax @ specified in Section 66. Recently inserted Section 71A reads as follows: Section 71A. - Notwithstanding anything contained in the provisions of Sections 69 and 70, the provisions thereof shall not apply to a person referred to in the proviso to Sub-section (1) of Section 68 for the filing of return in respect of service tax for the respective period and service specified therein and such person shall furnish return to the Central Excise Officer within six months from the day on which the Finance Bill, 2003 receives the assent of the President in the prescribed manner on the basis of the self assessment of the service tax and the provisions of Section 71 shall apply accordingly.
Section 73 has also undergone certain amendments by Finance Act, 2003. After the amendment Section 73 reads as follows: (a) the Assistant Commissioner of Central Excise or, as the case may be, the Deputy Commissioner of Central Excise has reason to believe that by reason of omission or failure on the part of the assessee, to make a return under Section 70 for any prescribed period or to disclose wholly or truly all material facts required for verification of the assessment under Section 71, the value of taxable service has escaped assessment or has been under assessed, or service tax has not been paid or has been short paid or any sum has erroneously been refunded, or (b) notwithstanding that there has been no omission or failure as mentioned in Clause (a) on the part of the assessee, the Assistant Commissioner of Central Excise or, as the case may be, Deputy Commissioner of Central Excise has, in consequence of information in his possession, reason to believe that the value of any taxable service assessable in any prescribed period has escaped assessment or has been under-assessed, or service tax has not been paid or has been short paid or any sum has erroneously been refunded, he may, in cases falling under Clause (a), at any time within five years, and in cases falling under Clause (b), at any time within one year, from the relevant date, serve notice on the person chargeable with the service fax which has escaped assessment or has been under assessed or has not been paid or has been short paid, or to whom any sum has been erroneously refunded, requiring him to show cause why he should not pay the amount specified in the notice.
(i) in the case of taxable service in respect of which service tax has escaped assessment or has been under-assessed or has not been paid or has been short paid - (a) where under the rules made under this Chapter, a periodical return, showing particulars of service tax paid during the period to which the said return relates, is to be filed by an assessee, the date on which such return is so filed; (b) where no periodical return as aforesaid is filed, the last date on which such return is to be filed under the said rules; (c) in any other case, the date on which the service tax is to be paid under this Chapter or the rules made thereunder, (ii) in a case where the service tax is provisionally assessed under this Chapter or the rules made thereunder, the date of adjustment of the service tax after the final assessment thereof, (iii) in a case where any sum, relating to service tax has erroneously been refunded the date of such refund.
The above would show that even the amended Section 73 takes in only the case of assessees who are liable to file return under Section 70. Admittedly, the liability to file return is cast on the appellants only under Section 71A. The class of persons who come under Section 71A is not brought under the net of Section 73. The above being the position show cause notices issued to the appellants invoking Section 73 are not maintainable.
5.1. He also submits that the decision of L.H. Sugar Factories Ltd. cited supra has been affirmed by the Hon'ble Supreme Court as reported in 2005 (197) ELT 5 (SC). He also relies on the decision of the Tribunal in the case of Tamil Nadu cements Corporation Ltd. v. C.C.E., Trichy reported in 2007 TIOL - 817 CESTAT - MAD wherein it has been held as follows: 4. During the period of dispute, Service tax was not recoverable on GTO service from a recipient thereof. In order to make recipients of GTO service liable to pay Service tax for that period, Parliament amended the relevant Rule under the Finance Act, 2000, which came into force on 12-5-2000. Later on, under the Finance Act, 2003, Section 71A was inserted in the Finance Act, 1994. This new provision cast a liability on recipients of GTO service to file returns. In the case of L.H. Sugar Factories Ltd., this Tribunal considered all these amendments and held that the class of persons who fell under Section 71A did not come within the purview of Section 73 and, therefore, SCN issued under Section 73 for recovery of Service tax from such persons were not maintainable. This view was upheld by the Supreme Court in CCE, Meerut v. L.H. Sugar Factories Ltd. 2005 (187) E.L.T 5 (S.C.) : 2005 - TIOL -105 -SC - ST. The SCN in the instant case was issued only on 3-4-2004 and the same was under Section 73 of the Finance Act, 1994. The amendment brought to the said Finance Act or the Rules framed thereunder did not have the effect of bringing assessees like the appellants within the fold of Section 73 as per the ruling of the Apex Court in L.H. Sugar Factories (supra). We have not found anything in the Apex Court's judgment in Gujarat Ambuja Cements (supra) as running counter to the view taken by the Court in L.H. Sugar Factories (supra).
6. I have carefully considered the submissions from both sides. The decision in the case of Mangalam Cement Ltd. relied by the ld SDR has taken into account that the return had been filed by the said company as per machinery provision under Section 71A read with Section 7A though service tax was paid by them subsequently, having lost on their writ petitions being dismissed by the Hon'ble Supreme Court (para 13 of the decision). The facts of the present case are akin to the case of L.H. Sugar Factories Ltd. and Tamil Nadu Cement Corporation Ltd. cited by the learned Advocate.