Retrospective validation of service tax on goods transport operator services sustained the tax demand and consequential interest liability.

Service tax on goods transport operator services was retrospectively validated for the period 16-11-1997 to 2-6-1998 by Sections 116 and 117 of the Finance Act, 2000, curing the earlier ultra vires levy. On that basis, the demand on gross freight and the consequential interest liability were treated as legally sustainable, with no legal or factual infirmity found in the impugned orders. The retrospective levy and interest demand were therefore upheld, and the appeals were rejected.

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Issues: Whether service tax on goods transport operator services was validly leviable retrospectively for the period 16-11-1997 to 2-6-1998 after enactment of Sections 116 and 117 of the Finance Act, 2000, and whether the demand of tax with interest was sustainable.

Analysis: The earlier levy had been held ultra vires, but the Finance Act, 2000 introduced validating provisions making service tax leviable retrospectively for the disputed period. On that footing, the demand of service tax on gross freight and the consequential interest liability were held to have a legal basis, and no legal or factual infirmity was found in the impugned orders.

Conclusion: The retrospective levy and consequential interest demand were upheld and the appeals were rejected.

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