2016 (3) TMI 716 - AT - Service Tax

Service tax liability clarified for GTA services, retrospective effect of Finance Act 2004, and hierarchy in court decisions

The case involved issues concerning service tax liability for the period 1997-1998 on GTA services, interpretation of the Finance Act, 2004 with ... Demand of Service tax for the period 1997-1998 - Period of limitation - Recipient of GTA services - Held that:- the decision of the Larger Bench, which stand relied upon by the authorities below was considered by the Tribunal in the case of Kisan Sahkari Chini Mills vs. CST, NOIDA [2013 (5) TMI 57 - CESTAT, NEW DELHI] but there were various other decisions of various High Courts holding in favour of the assessee, on the point of limitation. The Hon’ble High Court decision would have preference over the Larger Bench decision of the Tribunal and by following the Hon'ble High Court decision, demands issued in 2004, for the period 1997-1998 are set aside. - Decided in favour of appellant with consequential relief Issues involved:1. Service tax liability for the period 1997-1998 on GTA services.2. Interpretation of the Finance Act, 2004 with retrospective effect.3. Conflict between decisions of the Tribunal and various High Courts on the point of limitation for recovery of service tax.4. Applicability of the Larger Bench decision in the case of Agauta Sugar and Chemicals.5. Preference of High Court decisions over Tribunal decisions on the point of limitation.Detailed Analysis:1. The judgment concerns the service tax liability for the period 1997-1998 related to GTA services. The issue arose due to a show cause notice issued in 2004, requiring the recipient of service to pay the service tax. The Finance Act, 2004 was amended with retrospective effect, leading to the issuance of show cause notices by the Revenue for recovery of service tax for earlier periods after 10.9.2004.2. The conflict in decisions by various Benches regarding the limitation period for recovery of service tax led to the matter being referred to a Larger Bench. The Larger Bench in the case of Agauta Sugar and Chemicals held that show cause notices issued after the amendment of Section 73 by the Finance Act, 2004 are sustainable. However, various High Courts had different views on demands issued in 2004 for liabilities arising from 1997-1998, citing limitation bars.3. The lower authorities in the present case relied on the Larger Bench decision of the Tribunal in Agauta Sugar and Chemicals. However, the Tribunal in the case of Kisan Sahkari Chini Mills observed that High Court decisions favoring the assessee on the point of limitation should take precedence over the Tribunal's decision. Following this reasoning, demands issued in 2004 for the period 1997-1998 were set aside.4. The judgment emphasizes the importance of following High Court decisions when they were not before the Larger Bench of the Tribunal. The Larger Bench decision was considered not applicable in situations where it conflicted with the declaration of law by various High Courts. Consequently, the impugned orders were set aside, and the appeals were allowed with consequential relief to the appellants.5. The judgment highlights the significance of hierarchy in courts and tribunals, indicating that decisions of High Courts should be respectfully followed when they differ from Tribunal decisions. By setting aside the demands in identical situations based on High Court decisions, the Tribunal upheld the preference of High Court decisions over Tribunal decisions on the point of limitation for recovery of service tax.