Retrospective validation of service tax on goods transport operator services sustained the levy and interest demand.

Sections 116 and 117 of the Finance Act, 2000 were treated as retrospectively validating service tax on Goods Transport Operator services for 16-11-1997 to 2-6-1998, so the levy was sustained for that period. On that basis, the quantified demand based on gross freight, along with service tax at 5% and interest at 24% per annum for delayed payment, was upheld as legally sustainable.

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Issues: Whether service tax on Goods Transport Operator Services was validly leviable retrospectively for the period 16-11-1997 to 2-6-1998 in view of the Finance Act, 2000, and whether the demand of service tax with interest was sustainable.

Analysis: The earlier proceedings had been dropped after the Supreme Court held the user-liability provisions under the original service tax scheme to be ultra vires. The subsequent enactment of Sections 116 and 117 of the Finance Act, 2000 was treated as having validated the levy retrospectively for the relevant period. On that basis, the Tribunal found no legal or factual infirmity in the Commissioner's order directing quantification of gross freight, levy of service tax at 5%, and interest at 24% per annum on delayed payment.

Conclusion: The retrospective levy of service tax for the relevant period was upheld and the demand with interest was sustained, against the assessee.

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