Retrospective service tax demands for Goods Transport Agency services were held time barred on limitation grounds.

Retrospective service tax liability on Goods Transport Agency services was examined on limitation, with the relevant period running from the date settled under the Finance Act, 1994. A show cause notice issued after the permissible period could not sustain the demand, and the jurisdictional High Court view on limitation was followed despite another High Court's contrary view. The demand was therefore treated as time barred, and relief went to the assessee.

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Issues: Whether the show cause notice and demand for service tax on Goods Transport Agency services, issued after the retrospective amendment to the Finance Act, 1994, were barred by limitation.

Analysis: The demand related to services received during December 1997 to May 1998, while the show cause notice was issued on 18.05.2005. The issue turned on the relevant date for limitation after the retrospective introduction of liability under Section 68(1) and Section 71A of the Finance Act, 1994, read with Section 73 of the same Act. The jurisdictional High Court had already held that such demands, when issued beyond the permissible period, could not be sustained. Although another High Court view was noticed, the Tribunal followed the jurisdictional High Court on the limitation question.

Conclusion: The demand was held to be time barred and the appeal was allowed in favour of the assessee.

Ratio Decidendi: In cases of retrospective service tax liability, a demand issued beyond the limitation period computed from the relevant date, as settled by the jurisdictional High Court, is not sustainable.

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