Service tax demand on Goods Transport Operator service recipients failed where notices came only after the levy period and amendment.

Service tax demands on recipients of Goods Transport Operator services were held unsustainable where the notices were issued only after the relevant levy period and after a retrospective amendment. The text notes that the tax for that period had originally been fastened only on Goods Transport Operators, and that Rule 2(d)(xii) and Rule 2(d)(xvii) of the Service Tax Rules, 1994 had earlier been held ultra vires. The retrospective amendment did not cure the defect because the demands were not backed by a notice issued before the period of levy. The appeals succeeded.

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Issues: Whether service tax demands raised on recipients of Goods Transport Operator services were sustainable when the show cause notices were issued after the relevant period and after the retrospective amendment.

Analysis: Service tax for the relevant period was initially fastened only on Goods Transport Operators. Rule 2(d)(xii) and Rule 2(d)(xvii) of the Service Tax Rules, 1994 had earlier been held ultra vires. The retrospective amendment did not cure the defect where show cause notices for the period in dispute had been issued only subsequently. Demands not supported by a notice issued before the period of levy could not be confirmed.

Conclusion: The demands were not sustainable and the appeals succeeded.

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