Pre-amendment Section 73 notice cannot sustain demand against a Section 71A service recipient; demand set aside.

A show cause notice issued under Section 73 of the Finance Act, 1994 before the 10.09.2004 amendment could not sustain a demand against a recipient of services required to file returns under Section 71A. The Tribunal applied the Supreme Court view that, until Section 71A was brought within the scope of Section 73, non-compliance by such assessees was not covered by the unamended provision. Notices issued before the amendment therefore could not support recovery, and later amendment-based rulings did not assist the Revenue on these facts. The notice issued in April 2004 was held unsustainable and the demand was set aside.

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Issues: Whether a show cause notice issued under Section 73 of the Finance Act, 1994 before the amendment of 10.09.2004 could sustain a demand against a recipient of services liable to file returns under Section 71A of the Finance Act, 1994.

Analysis: The liability in question arose from a category of assessees governed by Section 71A, while Section 73 was amended only from 10.09.2004 to bring such violations within its scope. The earlier notices issued before that amendment were not covered by the unamended Section 73. The Tribunal followed the binding Supreme Court view that, unless Section 71A was incorporated into Section 73, no demand could be raised for such non-compliance. The later amendment and decisions rendered in respect of notices issued after the amendment did not assist the Revenue on the present facts.

Conclusion: The show cause notice issued in April 2004 was not sustainable, and the demand was rightly set aside.

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