Retrospective validation could not revive a past goods transport operator service tax demand, and consequential penalties also fell.

Retrospective validation of the goods transport operator service tax levy did not permit a fresh demand for the past period where the earlier levy had been struck down and the matter had not been kept alive under the then-existing scheme. The Tribunal followed High Court rulings and held that the later amendment to section 73 did not cure the defect for the disputed period, especially since the earlier notice had already been dropped without challenge. The revised show-cause notice for the recipient's liability was therefore not maintainable, and the penalties also failed because they were consequential to the demand.

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Issues: Whether the service tax demand raised by the revised show-cause notice dated 09.11.2004 for goods transport operator services received during 16.11.1997 to 01.06.1998 was maintainable in view of the retrospective amendments validating the levy, and whether penalties could survive if the demand failed.

Analysis: The demand related to tax on the recipient of goods transport operator services for a period when the relevant levy had earlier been struck down as ultra vires. Although the law was later validated retrospectively by amendments in the Finance Act, 2000 and further changes were made to the charging and return provisions, the Tribunal followed High Court decisions holding that demands for the past period could not be freshly initiated after the validating amendments where the matter had not been kept alive under the then-existing statutory scheme. The later amendment to section 73 did not cure the defect for the disputed past period, and the earlier notice dated 15.11.2002 had already been dropped without challenge.

Conclusion: The revised demand was held not maintainable, and the penalties also could not stand as they were consequential to the demand.

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