Section 73 notice limits for service tax demand under Goods Transport Operators service clarified by settled return-filing scope

A show-cause notice under section 73(a) of the Finance Act, 1994 is stated to be unsustainable for Goods Transport Operators service demands where the persons concerned were not within the return-filing obligation under section 70. The note relies on the earlier L.H. Sugar Factories Ltd. view that the amended section 73 covered only assessees required to file returns under section 70, while persons covered by section 71A remained outside its scope. That interpretation was affirmed by the Supreme Court and followed in later connected appeals, leaving no basis to depart from the settled position.

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Issues: Whether service tax demands for Goods Transport Operators service for the relevant period were sustainable under section 73(a) of the Finance Act, 1994.

Analysis: The demand was founded on section 73(a) of the Finance Act, 1994. The Tribunal relied on its earlier decision in L.H. Sugar Factories Ltd., where it had been held that the amended section 73 covered only assessees liable to file returns under section 70, whereas the persons covered by section 71A were not brought within its net, making such show-cause notices unsustainable. The Supreme Court had affirmed that view, and this Bench had also followed the same ratio in a batch of connected appeals. No reason was found to depart from that binding position.

Conclusion: The demand was held to be unsustainable and the revenue appeals were dismissed.

Ratio Decidendi: A show-cause notice invoking section 73(a) of the Finance Act, 1994 is not maintainable against persons not brought within the scope of the return-filing obligation under section 70 and section 71A remains outside that net.

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