2015 (2) TMI 524

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.... freight charges to the goods Transport Operators. The demand of Service Tax on this amount was confirmed as payable under Rule 2(1)(d)(xii) of the Service Tax Rules by invoking extended period under Section 73(1) of the Act. Initially the show-cause notice demanding duty was issued on 15.11.2002. But, the valuation of Service Tax under said Rule 2 (1)(d)(xii) was struck down as ultra vires by the Hon'ble Supreme Court in the case of Laghu Udyog Bharati vs. Union of India 1999 (112) E.L.T. 365 (SC). However, the levy of tax was re-validated in terms of Section 117 of the Finance Act, 2000 with retrospective from 16th July 1997. The Act received the assent of the President of India on 12.05.2000. Therefore, a revised show-cause notice wa....

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....ly considered the rival contentions. It will be useful to briefly go into the history of the levy of Service Tax on Goods Transport Operators. As mentioned in the facts in paragraphs above, the Rule 2(1) (d) (17) of the Service Tax Rules provided for demanding duty from service receivers. This was held to be ultra vires by the Hon'ble Supreme Court in the case of Laghu Udyog Bharati vs. Union of India - 1999 (112) ELT 365 (S.C). because the Act provided for demanding duty only from service providers. To rectify the situation, Section 117 of the Finance Act, 2000 made retrospective amendment to the law to validate the action taken under the said Rule and introduced Section 68 (1) to make the levy applicable to service receivers retrospec....

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.... issue is concerned, the Supreme Court has in J.K. Cotton Spinning and Weaving Mills Ltd. and Another v. Union of India and Others, 1987 (32) E.L.T. 234 has held that even if a provision is amended with retrospective effect, the Department can proceed with the demand only if the matter was kept alive at the time when the original provisions was in force. Otherwise, no action can be initiated afresh after the amendment was introduced validating action taken under the provisions which were earlier struck down. The petitioner therefore would contend that insofar as the petitioner had not been served with any demand notice during the period between 16-7-1997 and 15-10-1998 and therefore in respect of that period, the petitioner could not have b....