Service tax recovery under Section 73 fails for Goods Transport Operator recipients covered by Section 71A and binding precedent.

Service tax recovery from a recipient of Goods Transport Operator service for the disputed period could not be sustained under Section 73 of the Finance Act, 1994 where the assessee fell within Section 71A. The earlier Supreme Court ruling in L.H. Sugar Factories Ltd. remained binding, holding that persons covered by Section 71A were outside the scope of recovery by show cause notice under Section 73. A later departmental challenge did not affect that precedent in the absence of any stay. The demand was therefore unsustainable and the appeal succeeded.

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Issues: Whether service tax could be recovered from a recipient of Goods Transport Operator service for the relevant period under Section 73 of the Finance Act, 1994, in the light of Section 71A and the binding precedent on the point.

Analysis: The liability for the relevant period had already been considered in earlier decisions, including the Supreme Court ruling in L.H. Sugar Factories Ltd., which held that persons covered by Section 71A did not fall within the scope of Section 73 for recovery by show cause notice under that provision. The later departmental challenge in another matter did not alter the binding force of that ruling in the absence of any stay of operation. The impugned demand was issued under Section 73 of the Finance Act, 1994 and therefore could not be sustained against the recipient assessee for the disputed period.

Conclusion: The demand of service tax was unsustainable and the appeal succeeded.

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