Pre-10-9-2004 service tax recovery notices under Section 73 were unsustainable for goods transport operator service recipients.

Section 73 of the Finance Act, 1994, as it stood before 10-9-2004, was held not to authorise recovery from recipients of goods transport operator services liable to file returns under Section 71A read with Rule 7A. The Tribunal followed its earlier coordinate bench rulings and the Larger Bench view, and found that show cause notices and corrigenda issued before the amendment could not sustain the revenue demand for that period. On judicial discipline, it declined to depart from the settled position and held the notices bad in law, with the demand unsustainable.

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Issues: Whether show cause notices issued prior to 10-9-2004 for recovery of service tax on goods transport operator services from the recipient were valid under Section 73 of the Finance Act, 1994 and whether the demand could be sustained.

Analysis: The Tribunal followed its earlier coordinate bench decisions and the Larger Bench view that, prior to the substitution of Section 73 with effect from 10-9-2004, the provision did not cover recipients liable to file returns under Section 71A read with Rule 7A. The notices and corrigenda in the present matter were issued before that amendment, so the recovery mechanism invoked by Revenue was not available for the relevant period. On judicial discipline, the Tribunal declined to depart from the earlier decisions holding such pre-10-9-2004 notices to be unsustainable.

Conclusion: The show cause notices were bad in law and the demand was not sustainable; the appeal succeeded in favour of the assessee.

Ratio Decidendi: A show cause notice for service tax recovery cannot be sustained where, for the relevant period, Section 73 of the Finance Act, 1994 as then in force did not authorize recovery from recipients of goods transport operator services liable under Section 71A read with Rule 7A.

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