Recipient liability for clearing and forwarding service tax before 1-9-1999 defeated refund claim for the earlier period.

Recipient liability for clearing and forwarding services for July and August 1999 continued to rest with the recipient because the service tax liability for that period arose before 1-9-1999. Notification No. 7/99 shifted the liability only from 1-9-1999, and the amendments in Sections 116 and 117 of the Finance Act, 2000 confirmed that position for the earlier period. As the tax related to the pre-1-9-1999 period, the amount paid could not be treated as refundable. The refund ordered by the Tribunal was therefore unsustainable.

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Issues: Whether the respondent, as recipient of clearing and forwarding services, was liable to pay service tax for July and August 1999 and whether the tax paid for that period was refundable.

Analysis: The service tax liability in respect of the relevant period arose before 1-9-1999. Notification No. 7/99 shifted the liability from 1-9-1999, and the amendments introduced in Sections 116 and 117 of the Finance Act, 2000 confirmed the position that, for the period prior to that date, the recipient remained liable. Since the tax in question related to July and August 1999, the amount paid by the respondent could not be treated as refundable.

Conclusion: The respondent was liable to pay service tax for the relevant period, and the refund ordered by the Tribunal was unsustainable.

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