2004 (10) TMI 7 - AT - Service Tax

Tribunal rules in favor of assessee in Service Tax dispute, citing limitation period and Supreme Court precedent.

The Tribunal dismissed the Revenue's appeal and allowed the assessee's appeal in a case concerning Service Tax demands for 'Clearing and Forwarding' and ... Service Tax – Receiving services of Clearing and Forwarding and Goods Transport services – Demand – Limitation Issues:1. Challenge against dropping of Service Tax demand on respondents for 'Clearing and Forwarding' services.2. Appeal against Service Tax demand for 'Goods Transport' services.3. Determination of liability of service recipients for Service Tax during specific periods.Analysis:1. The first issue pertains to the challenge against dropping the demand of Service Tax on the respondents for 'Clearing and Forwarding' services. The demand was initially raised in a show cause notice issued on 14-2-2003 for the month of August 1999. The original authority confirmed the demand, but the first appellate authority vacated it. The central question in this appeal was whether the respondents were liable to pay Service Tax for the services received during the disputed period. The counsel for the assessees argued that the demands were beyond the limitation period prescribed under Section 73 of the Finance Act, 1994, and were also affected by a ruling of the Supreme Court in Laghu Udyog Bharati v. UOI [1999 (112) E.L.T. 365 (S.C.)]. The Tribunal, after considering the submissions, concluded that the demands were indeed beyond the limitation period and were impacted by the Supreme Court's ruling. Therefore, the appeal of the Revenue was dismissed, and the appeal of the assessee was allowed.2. The second issue revolves around the appeal against a demand of Service Tax for 'Goods Transport' services received by the appellants for the period 16-11-1997 to 1-6-1998. The demand was raised in a show cause notice on 13-5-2002 and was confirmed by the original authority and sustained by the first appellate authority. The counsel for the appellants argued that the demands were barred by limitation and affected by the ruling in Laghu Udyog Bharati. The Tribunal noted that the demands were raised beyond the limitation period prescribed under Section 73 of the Finance Act, 1994, and were not impacted by the amendments made by Parliament. Consequently, the appeal of the assessee was allowed in this case as well.3. The final issue involved determining the liability of the service recipients for Service Tax during the respective disputed periods. The Tribunal highlighted that rules for recovering Service Tax from service recipients were held to be ultra vires by the Supreme Court in Laghu Udyog Bharati. Parliament subsequently made amendments to the Finance Act, 1994, to address this issue for a limited period. However, the demands in the present cases were raised after the relevant amendments and were beyond the prescribed limitation period. Therefore, the Tribunal concluded that the demands were not valid and ruled in favor of the assessees.