Service tax demand against a service recipient failed where Section 73 could not apply for the pre-Section 71A period.

For the relevant pre-Section 71A period, Section 73 of the Finance Act, 1994 could not be invoked to demand service tax from a service recipient who was not required to file a return under Section 70. The retrospective validation relied on by the revenue did not change the controlling scheme because Section 73, as it then stood, applied to assessees liable to file returns under Section 70. Since the appellant was only a service recipient during the relevant period, the notice for non-filing of such a return was not sustainable and the impugned demand was set aside.

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Issues: Whether, after the retrospective amendment, service tax could be demanded from a service recipient for the relevant period on the basis of a notice under Section 73 of the Finance Act, 1994.

Analysis: The demand arose from services availed from transport operators during a period when the appellant was only a service recipient. The retrospective validation invoked by the revenue did not alter the controlling scheme of Section 73, which, during the relevant period, applied to assessees liable to file returns under Section 70. The liability to file a return in respect of a service recipient was introduced only later by Section 71A. Since the appellant was not required to file a return under Section 70 for the relevant period, a notice under Section 73 for non-filing of such return was not sustainable.

Conclusion: The service tax demand against the appellant was not sustainable and the issue is decided in favour of the assessee.

Final Conclusion: The impugned demand was set aside, with consequential relief as permissible in law.

Ratio Decidendi: For the relevant pre-Section 71A period, Section 73 of the Finance Act, 1994 could not be used to demand service tax from a service recipient who was not liable to file a return under Section 70 of the Finance Act, 1994.

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