2006 (11) TMI 578 - AT - Service Tax

Goods transport operator not liable for service tax pre-2003 Finance Bill; Tribunal drops demand.

The Tribunal held that the appellant, a goods transport operator, was not liable to pay service tax based on a show cause notice received in 1999, as the ... - Issues:- Liability to pay service tax based on show cause notice- Obligation to file service tax return- Applicability of Finance Bill, 2003 on filing returnLiability to pay service tax based on show cause notice:The appellant, a carrier of goods transport operator services, received a show cause notice in 1999 under sections 70, 76, and 77 of the Finance Act, 1994. The notice did not quantify the amount of service tax. The adjudicating authority referred to a Supreme Court decision and dropped the show cause notice, stating that certain provisions making persons other than clearing and forwarding agents or goods transport operators responsible for collecting service tax were ultra vires the Act. The appellant argued that since section 73 of the Finance Act, 1994 was not invoked to demand service tax, there was no obligation to pay. The appellant relied on various tribunal decisions to support this contention. The Revenue opposed, stating that the show cause notice demanded service tax, making the appellant liable. The Tribunal considered the arguments and found that the appellant was not obliged to file a service tax return until the Finance Bill of 2003 made it compulsory, thus upholding the adjudicating authority's decision to drop the demand.Obligation to file service tax return:The appellant contended that the obligation to file a service tax return arose only after the enactment of section 71-A in the Finance Bill of 2003, making it compulsory for the first time. The appellant argued that before this provision, there was no requirement to file a return, thus no liability for service tax, interest, or penalty. The appellant cited tribunal decisions to support this argument. The Revenue disagreed, stating that the show cause notice clearly stipulated the demand for service tax, making the appellant liable. The Tribunal, after considering the arguments and relevant case law, found that the appellant was correct in asserting that the obligation to file a return only arose with the enactment of the Finance Bill of 2003, and therefore upheld the decision to drop the demand.Applicability of Finance Bill, 2003 on filing return:The central issue revolved around the timing of the obligation to file a service tax return. The appellant argued that the obligation arose only after the Finance Bill of 2003, which made filing compulsory for the first time. The appellant relied on various tribunal decisions to support this position. The Revenue contended that the show cause notice demanded service tax, establishing the liability of the appellant. The Tribunal carefully analyzed the arguments, case law, and the provisions of the Finance Bill of 2003. Ultimately, the Tribunal agreed with the appellant's interpretation, holding that the obligation to file a return only arose with the enactment of the Finance Bill of 2003, and therefore allowed the appeal filed by the appellant.