Service tax on Goods Transport Operators' Service may remain due while penalties can still be waived on sufficient cause.

Service tax on Goods Transport Operators' Service is discussed in the context of the post-amendment validation and return-filing mechanism under Section 71A of the Finance Act, 1994, as introduced by the Finance Act, 2003, with the note stating that the tax remained legally due despite earlier appellate relief. It also records that penalty exposure can still be avoided where sufficient cause is shown on the facts, so penalty relief may be maintained even when the tax demand survives.

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Issues: (i) Whether the service tax demanded in respect of Goods Transport Operators' Service was legally payable by the assessee under the post-amendment scheme; (ii) Whether penalties imposed under the service tax provisions were sustainable in the facts of the case.

Issue (i): Whether the service tax demanded in respect of Goods Transport Operators' Service was legally payable by the assessee under the post-amendment scheme.

Analysis: The assessee had availed the service during the relevant period and the demand arose in the context of the validating and return-filing mechanism introduced by Section 71A of the Finance Act, 1994 through the Finance Act, 2003. The Tribunal accepted that the tax amount was legally due, notwithstanding the earlier relief granted by the Commissioner (Appeals).

Conclusion: The service tax demand was upheld in favour of Revenue.

Issue (ii): Whether penalties imposed under the service tax provisions were sustainable in the facts of the case.

Analysis: Although the tax liability was upheld, the Tribunal found that there was sufficient cause to sustain the appellate relief on penalties. In the circumstances, the penalty provisions were not to be enforced against the assessee.

Conclusion: The penalties were set aside in favour of the assessee.

Final Conclusion: The demand of service tax was restored, but the relief from penalties was maintained, resulting in a partial success for Revenue.

Ratio Decidendi: Where tax liability is legally due, penalties may still be waived if sufficient cause is shown on the facts.

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