Retrospective service tax amendment cannot sustain demand on GTA service recipients without valid pending proceedings.

Retrospective amendment of the service tax provisions did not, by itself, authorise recovery from the recipient of Goods Transport Agency services where no proceedings were pending when the amendment took effect. The Tribunal held that the demand mechanism under Section 73 of the Finance Act, 1994 could not be used to fasten liability in those circumstances, and followed the High Court view relied on by the assessee. A show cause notice issued in 2007 for the earlier period was therefore unsustainable, and the demand and penalties were set aside.

---

---

Issues: Whether service tax could be demanded from the recipient of Goods Transport Agency services by a show cause notice issued after the retrospective amendment when no proceedings were pending at the time of amendment.

Analysis: The liability to pay service tax originally rested on the person providing the taxable service. Although Section 71A of the Finance Act, 1994 was introduced to require returns from the recipient and the relevant provisions were retrospectively amended, the demand mechanism under Section 73 of the Finance Act, 1994 could not be applied to fasten liability in the absence of pending proceedings. The Tribunal followed the view taken by the High Court decisions relied upon by the appellant and held that a notice issued in 2007, after the retrospective amendment, could not sustain the demand for the earlier period.

Conclusion: The demand of service tax was held to be unsustainable and the assessee succeeded.

Final Conclusion: The impugned order confirming the demand and penalties was set aside and the appeal was allowed.

Ratio Decidendi: A retrospective amendment does not, by itself, authorise recovery of service tax from a recipient unless the statutory charging and recovery machinery clearly covers the demand and the proceedings were pending or otherwise validly maintainable under the amended law.

---