Service tax return obligation arose later, so an unquantified demand without section 73 proceedings was unsustainable.

For the 1997-98 period, the service tax return obligation for the relevant category arose only after section 71A was introduced, so the assessee could not be fastened with return-filing default for that earlier period. The notice was issued under sections 70, 76 and 77, but no tax demand was quantified and no effective proceeding under section 73 was shown. Applying earlier Tribunal decisions, the demand, interest and penalty were held unsustainable. The notice was dropped and the appeal was allowed.

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Issues: Whether the appellant was liable to file service tax returns and face demand, interest, and penalty when the statutory obligation to file returns arose only later and no valid proceeding under section 73 was invoked.

Analysis: The period involved was 1997-98. The notice proceeded under sections 70, 76 and 77 of Chapter V of the Finance Act, 1994, but the service tax amount was not quantified and no effective action under section 73 was shown. The obligation to file a service tax return for the category in question arose only upon the introduction of section 71A, and the Tribunal applied the earlier decisions cited before it to hold that, in the absence of the statutory basis for demand and return filing for the relevant period, the demand could not be sustained.

Conclusion: The appellant was not liable to the impugned demand, interest, or penalty, and the order dropping the notice was ; the appeal was allowed.

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