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....rbles Pvt. Ltd. Vs. CCE, Jaipur-II - 2007-TIOL-29-CESTAT-DEL on the one hand and CCE Vs. Mangalam Cement - 2007 (7) STR 673 (Tri. - Del.) on the other. 2. In the case of R.K. Marbles (supra), it has been held on 3.1.2006 by the Single Member Bench of the Tribunal that the issue is squarely covered by the decision of the Tribunal in the case of L.H. Sugar Factories Vs. CCE, Meerut - 2004 (165) ELT 161 on 1.1.2004 which has been upheld by the Hon'ble Supreme Court in CCE, Meerut Vs. L.H. Sugar Factories Ltd. - 2005 (187) ELT 5 (SC) on 27.7.2005. Hence the demand of tax was set aside. 3. In the case of BPL Engineering (supra), it has been held on 10.5.2006 by the Division Bench that the demands cannot be confirmed as the show-cause notice had not been issued prior to the amendment made in the law in 2004 following the decision in L.H. Sugar (supra). 4. In the case of Mangalam Cement (supra), it has been held in favour of the Revenue that the show-cause notice issued in 2004 is clearly within the prescribed period and therefore the demand is valid. STATUTATORY/ LEGAL DEVELOPMENTS:- 5. For a better understanding of the issues involved in these cases, we briefly indicate the statu....
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.... as the person liable to pay service tax to the credit of the Central Government. Section 71A was inserted making the customer liable to furnish service tax return within six months from the date on which the Finance Bill, 2003 received the assent of the President. The rule-making power under Section 94 was amended to include the making of rule for furnishing the return under Section 71A. (ii) Rule 7A was inserted in the Rules with effect from May 14, 2003 providing for furnishing of return by the customer of a goods transport operator for the period November 16, 1997 to June 2, 1998 within a period of six months from May 13, 2003 failing which the interest and penal consequences as provided in the Act were to follow. 2004 Section 73 was substituted by the Finance (No.2) Act, 2004 with effect from September 10, 2004. Prior to the said substitution, it applied to a case where return was to be filed under Section 70 but not where it was to be filed under Section 71A. The substituted section sought to cover a 'Section 71A read with Rule 7A' situation. March 17, 2005 The Hon'ble Supreme Court upheld the amendments made by Finance Acts, 2000 and 2003 in the case of Gujarat Ambuja C....
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....ndered the decision in the case of Laghu Udyog Bharati (supra), the necessary amendments have been made in the law to make clear the Legislative intent and to enable the Department to collect the tax levied on recipients of transport service. No interpretation should be placed on the law which would defeat the legislative intent. (c) In the case of L.H. Sugars (supra), show-cause notices were issued in 2002 prior to the amendments made in 2003 and 2004 and the said decision is not applicable to the present cases where the show-cause notices have been validly issued in 2004. (d) Mangalam Cement (supra) has adequately dealt with the issue relating to show-cause notices issued in the year 2004 and the ratio of the same is applicable to the present cases. (e) In the case of S.S. Gadgil (supra), time limit was sought to be extended after the expiry of the prescribed period and in that context the said judgment was delivered by the Hon'ble Supreme Court, but in the instant cases, the time limit was prescribed under Section 71A which was inserted by the Finance Act, 2003 and hence the ratio of S.S. Gadgil (supra) is not applicable to the present cases. FINDINGS 8. We have consider....
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....h the show-cause notices were issued in 2002. In the case of BPL Engineering (supra) the date of the show-cause notice is not mentioned but it is stated by the Tribunal therein that the show-cause notice had been issued only after the amendment in 2004. In the case of R.K. Marbles (supra), the Tribunal has noted that the show-cause notice was issued on 5.11.2004. Both the Tribunal Benches have granted relief in BPL Engineering (supra) and R.K. Marbles (supra) applying the decision of the L.H. Sugars (supra) but without taking into account the fact that Section 73 was amended with effect from 10.9.2004. On the other hand, the effect of the amendment has been taken into consideration by the Tribunal in the case of Mangalam Cement (supra) as is evident from the following findings: - "10.The relevant provisions of Sections 68(1), 71A and 73 as amended by Finance Act, 2004, with effect from 10-9-2004 read as under :- 68. Payment of service tax. - Every person providing taxable service to any person shall pay (1) service tax at the rate specified in Section 66 in such manner and within such period as may be prescribed. Provided that xxx xxx xxx xxx (ii) in relation to services provi....
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....paid (2) by him with the bank designated by the Central Board of Excise and Customs for this purpose in Form TR-6 or in any other manner prescribed by the Central Board of Excise and Customs. xxx xxx xxx xxx 7A. Returns in case of taxable service provided by goods transport operators and clearing and forwarding agents. - Notwithstanding anything contained in Rule 7, an assessee, in case of service provided by - (a) goods transport operator for the period commencing on and from the 16th day of November, 1997 to 2nd day of June, 1998; and (b) clearing and forwarding agents for the period commencing on and from the 16th day of July, 1997 to 16th day of October, 1998, shall furnish a return within a period of six months from the 13th day of May, 2003, in Form ST-3B along with copy of Form TR-6 in triplicate, failing which the interest and penal consequences as provided in the Act shall follow. 12. Relevant Form ST-3B in which returns of service tax for the period in question were to be filed required the mode of payment, challan Nos. and date of challans to be mentioned. The amount of service tax payable was also required to be mentioned against item No. 7. A declaration in the s....
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....nder which every assessee was required to submit half yearly returns in ST-3 Form or ST-3A by 25th of the month by following the particular half-year. Therefore, the scheme of Section 70 read with Rule 7 read with prescribed Forms ST-3 and ST-3A was wholly inapplicable to the situation, which arose by virtue of service tax liability of the receiver of GTO services, which arose by virtue of the validating laws at the much later but with effect from 16-11-1997. The special provisions enacted under Sections 71A and Rule 7A were designed to give effect to and realize the purpose underlying the validating provisions. It can be seen from the proviso to sub-section (1) of Section 68, which was inserted with effect from 16-7-1997, in relation to the services provided by goods transporter operator, that every person who was liable to pay the freight for the transportation of goods for the period commencing from 16th November, 1997 and ending with 2nd June, 1998, shall be deemed always to have been a person liable to pay service tax for such services provided to him, to the credit of the Central Government. This provision made the respondents-assessees liable to pay the service tax in respec....
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....isconceived in view of the amendments in the law, particularly, by insertion of the proviso to Section 68(1) and Section 71A which created enforceable liability of the recipients of services from GTOs during the period from 16-11-1997 to 1-6-1998. As held in J.K. Industries Ltd. v. CCE, Indore reported in 2006 (3) S.T.R. 14 (Tri.-Del.), such assessees were bound to file returns as mandatorily required by Section 7A. In the present case, the returns were filed by the respondents as per the said machinery provisions of Section 71A read with Rule 7A, though the service tax was paid by them subsequently, having lost on their writ petitions being dismissed by Hon'ble the Supreme Court. The respondents paid up the service tax in consonance with the outcome of their petitions by the decision of Hon'ble the Supreme Court, in a group of petitions in Gujarat Ambuja Cement Ltd. (supra). The service tax liability was assessed by the respondents-assessees in their ST-3B Form and was declared to be a correct self-assessment, as required by that Form. They have asserted that they had filed the ST-3B Form required to be filed under Rule 7A read with Section 71A within the time prescribed which was....
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....he Finance Act, 2000. Therefore, reliance placed on behalf of the respondents on the earlier decision of the Hon'ble Supreme Court in Laghu Udyog Bharati and the decision of the Tribunal in L.H. Sugar Factories Ltd. case in which the ratio of the Laghu Udyog Bharati was followed, is misplaced. 14. It will be noticed from the decision in L.H. Sugar Factories Ltd. (supra) that the show cause notice was issued in that case in the year 2002 and it is in that context the Tribunal concluded in Para 9 that the show cause notice issued to those appellants was not sustainable because under the provisions of Section 73, as it stood on the date of issue of the show cause notice and also under the provisions as amended by Finance Act, 2003 were not sustainable. Affirmation of that decision by Hon'ble the Supreme Court by order dated 27-7-2005 cannot be construed as nullifying the effect of the ratio of the decision of the Apex Court in Gujarat Ambuja Cement Ltd., (supra), in which it was categorically held, in the context of the said provisions, that the law must be taken as having always been as is now brought about by the Finance Act, 2000, and that the statutory foundation for the decision....
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....158 of the Finance Act, 2003, the bases on which this Court struck down Rule 2(1)(d), (xii) and (xvii) of the Service Tax Rules, 1994 had been displaced or removed. 15. Relying on the decision of the ratio in Gujarat Ambuja Cement Ltd. this Tribunal in J.K. Industries Ltd. v. CCE, Indore (supra) held as under :- It is a settled legal position that a statutory Act may be enacted prospectively or retrospectively. The retrospective effect can be given in case of curative and validating statutes. The curative statutes by their very nature are intended to operate upon and affect past transactions having regard to the fact that they operate on conditions already existing [See, ITW Signode India Ltd. v. Collector of Central Excise reported in 2002 (158) E.L.T. 403 (S.C.). In the present case, as already held by the Hon'ble Supreme Court in Gujarat Ambuja Cement Ltd. (supra), the law must be taken as having always been as was brought out by Finance Act, 2000 and that the statutory foundation for the decision of the Supreme Court in Laghu Udyog Bharati has been replaced and that decision has ceased to be relevant for the purposes of construing the provisions of the Act as amended by the F....
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....inserted by the Service Tax (Amendment) Rules, 2003 w.e.f. 14-5-2003 in which it was provided that, notwithstanding anything contained in Rule 7 which related to half-yearly return, an assessee in case of service provided by goods transport operator for the period from 16th day of November 1998 to 2nd day of June, 1998 shall furnish a return within a period of six months from the 13th day of May, 2003, in Form ST-3B along with copy of Form TR-6 in triplicate, failing which the interest and penal consequences as provided in the Act shall follow. It is, therefore, clear to us that not only the past recoveries were validated by Section 117, the amendment also provided for continuance of the liability of persons falling in the proviso of Section 68(1) who were to be deemed always to have been liable to pay service tax, for such services provided, to the credit of the Central Government. In such cases there was no scope for the applicability of Section 70 of the said Act and, therefore, the special provision for filing of returns was necessarily required to be made as per Section 71A, because, they could not have filed return earlier. Validating of legislation retrospectively curing def....
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.... liability having been arisen earlier on the expiry of the relevant period in 1998, is, therefore, wholly misconceived". 16. In view of the clear ratio of the decision of the Hon'ble the Supreme Court in Gujarat Ambuja Cement Ltd. (supra), which was followed by this Tribunal in J.K. Industries Ltd. (supra), any contrary decisions simply giving directions without dealing with or showing dissent from the ratio laid down in these decisions or attempting to distinguish them, cannot be considered to be laying down any precedent on the doctrine of ratio decidendi. Mere directions, issued contrary to the settled legal position, cannot be said to be laying down any contrary ratio, so as to constitute an opposite precedent or laying down a contrary proposition. We are of the opinion that the ratio of the decision of Hon'ble the Supreme Court in Gujarat Ambuja Cement Ltd. (supra), cannot be overlooked on the spacious plea of a learned Authorized Representative of the respondents-assessees that 'later is better'. It is obvious that while affirming the decision of the Tribunal in L.H. Sugar Factories Ltd. (supra), the Hon'ble the Supreme Court was not concerned with the validating provisions....
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....spute that the return which was filed as per the prescribed Form ST-3B under Rule 7A was not a periodic return, but a return which was required to be filed by the specified date, as contemplated by Section 71A read with Rule 7A. In sub-clause (c) of clause (i) of Section 73(6)(c) all other cases where no periodic return was involved, the date on which the service tax was to be paid was to be considered as the 'relevant date'. In the present case, the service tax was to be paid within six months from 13-11-2003 by filing the return in the prescribed Form ST-3B under Section 71A read with Rule 7A. The relevant date, therefore, in the present case for filing such return was 14-11-2003. Therefore, even if 14-11-2003 is considered and not 30-11-2003, which was the date extended by the Supreme Court, the show cause notices issued on 4-11-2004 were clearly within the prescribed period of one year." 11. We thus find that in these two cases of BPL Engineering (supra) and R.K. Marbles (supra), the Division Bench of the Tribunal and the Single Member Bench of the Tribunal which respectively decided these two cases did take note of the fact that the show-cause notices in both the cases were i....
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....e tax on such service was made effective from 16th November 1997 and was leviable till issue of the exemption notification dated 2.6.1998. In Laghu Udyog Bharati (supra), the levy of the tax was not under challenge but its collection from the customers was challenged. The retrospective amendments made subsequently in the year 2000 and 2003 have been upheld by the Hon'ble Supreme Court in the case of Gujarat Ambuja Cements (supra). It was specifically held by the Hon'ble Supreme Court in that case that a legislature is competent to remove infirmities retrospectively and make any imposition of tax declared invalid, valid. 14. Once a valid levy is authorized under the law which meets the constitutional mandate, the tax becomes payable by the taxpayers. It is well recognized that taxes are required to be paid so that the Governments can run and provide essential amenities to the citizens. In the words of Chief Justice Oliver Wendell Holmes, 'Taxes are what we pay for a civilized society'. It is also well recognized in all civilized countries that large proportion of the taxes are paid voluntarily by the taxpayers and the tax administration has to collect only the amounts which are not....
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.... the Customs Act, 1962). Rather, the power to recover tax which has escaped collection is a concomitant power arising out of the legal provision levying the tax (e.g. Section 12 of the Customs Act, 1962). The ratio of this judgment was relied upon by the Larger Bench of the Tribunal in Bombay Hospital Trust Vs. Commissioner of Customs, Sahar, Mumbai - 2005 (188) ELT 374 (Tri. - LB) to repel the argument that duty cannot be demanded in the absence of a specific legal provision for issuing a notice. The said Larger Bench order has since been affirmed by the Hon'ble Bombay High Court vide Bombay Hospital Trust Vs. CC (ACC), Mumbai - 2006 (201) ELT 555 (Bom.). 16. As regards issue of the demand notice, the Hon'ble Supreme Court has also time and again held that citing a wrong provision of law in the demand notice will not vitiate a demand. For example, in the case of J K. Steel Ltd. Vs. Union of India - (1969) 2 SCR 418 = (AIR 1970 SC 1173), it was held as follows:- "If the exercise of a power can be traced to a legitimate source, the fact that the same was purported to have been exercised under different power does not vitiate the exercise of the power in question. This is a w....
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....annum shall be payable, from the date immediately after the expiry of the said period of thirty days, till the date of payment. Interpreting a similar retrospective law, the Hon'ble Supreme Court had held in the case of R.C. Tobacco Pvt. Ltd. Vs. U.O.I. - 2005 (188) E.L.T. 129 (S.C.) that the retrospective legislation did not provide for issue of any notice and it provided a special time limit for tax recovery. The Hon'ble Supreme Court also observed that having upheld the constitutional validity of the retrospective legislation, it would be a pyrrhic victory for the Union of India if they could not in fact recover the tax. 18. In the light of the foregoing, when we consider the submissions made on behalf of the appellants, we arrive at the following inescapable conclusions: - (i) The decision in Mangalam Cement (supra) lays down the correct proposition in law holding that the relevant date has to be determined with reference to Section 71A of the Finance Act, 1994 read with Rule 7A and that the time period for issue of a valid demand has to be calculated with reference to such relevant date under the amended Section 73. (ii) The appellants cannot now take a stand that the tax....