2008 (9) TMI 103 - AT - Service Tax

Tribunal upholds lower authority's decision on service tax demands for GTO & C&F Agents Service

Commissioner of Central Excise, Salem Versus KKP. Textiles Ltd.

The Tribunal upheld the lower appellate authority's decision to dismiss the revenue's appeals challenging the validity of service tax demands for GTO ... Service tax for the period 16-11-1997 to 1-6-1998 on GTO services - in view of SC decision in case of L.H. Sugar Factories Ltd. held that amended section 73 takes in only the case of assessee who is liable to file return u/s 70. Admittedly, the liability to file return is cast on the appellants only u/s 71A. The class of persons who are u/s 71A is not brought under the net of section 73 - SCN issued to the appellants invoking section 73 are not maintainable. Issues:1. Validity of service tax demand for GTO services and C&F Agents Service.2. Applicability of judgment in CCE v. L.H. Sugar Factories Ltd.3. Maintainability of show-cause notices under section 73 of the Finance Act, 1994.4. Challenge to the judgment of the Apex Court.5. Dismissal of appeals filed by revenue.Issue 1: Validity of service tax demand for GTO services and C&F Agents ServiceThe original authority had demanded service tax for the period 16-11-1997 to 1-6-1998 on GTO services and for the period 16-9-1997 to 31-8-1999 on C&F Agents Service from the respondents. The revenue challenged these demands, arguing that the judgment relied upon by the lower appellate authority was not final as it was under appeal at the Apex Court. The revenue contended that the legislative intention to collect service tax during the disputed period was being nullified by the judgment, which they believed was contrary to the legislative intent.Issue 2: Applicability of judgment in CCE v. L.H. Sugar Factories LtdThe Tribunal had previously held in the case of CCE v. L.H. Sugar Factories Ltd that the notices invoking section 73 of the Finance Act, 1994 were not maintainable to recover taxes from assessees who were required to file returns under section 71A of the Act. The Apex Court upheld this decision, emphasizing that section 73 only applied to those liable to file returns under section 70, not section 71A. The lower appellate authority in the present case followed this judgment, leading to the dismissal of the revenue's appeals.Issue 3: Maintainability of show-cause notices under section 73The Apex Court's judgment clarified that show-cause notices invoking section 73 of the Finance Act, 1994 were not maintainable for assessees required to file returns under section 71A. This decision was binding and formed the basis for dismissing the revenue's appeals in the present case as the revenue failed to raise any valid challenge to the impugned orders.Issue 4: Challenge to the judgment of the Apex CourtThe revenue's challenge to the judgment of the Apex Court was deemed untenable by the Tribunal. The Tribunal found no merit in the revenue's arguments questioning the validity of the Apex Court's judgment. The Tribunal upheld the lower appellate authority's decision to follow the Apex Court's judgment, leading to the dismissal of the revenue's appeals.Issue 5: Dismissal of appeals filed by revenueUltimately, the Tribunal dismissed the appeals filed by the revenue as lacking merit. The Tribunal noted that the revenue failed to present any valid challenges to the impugned orders and upheld the lower appellate authority's decision to rely on the binding ratio of the Apex Court's judgment. Therefore, the appeals were dismissed.