2009 (7) TMI 33 - AT - Service Tax

Demand u/s 73 and imposing penalties GTA service - Section 73 takes in only the case of assessees who are liable to file return under Section 70. The liability to file return is cast on the assessees only under Section 71-A which was introduced in the Finance Bill 2003. Thus during the period in question no notice could have been issued under Section 73 for non filing of return under Section 70 no penalty can be imposed.

Summary

Issues:
1. Demand of service tax confirmed by the adjudicating authority.
2. Interpretation of Section 73 of the Finance Act, 1994.
3. Applicability of Section 71-A for filing returns.
4. Retrospective operation of provisions.
5. Validity of show cause notices invoking Section 73.
6. Judicial decisions on liability to file returns.

Analysis:
The judgment revolves around the demand of service tax amounting to Rs.1,09,236/-, interest, and penalties imposed by the adjudicating authority, which were subsequently set aside by the Commissioner (Appeals), leading to an appeal by the Revenue. The issue in dispute, covering the period from 16.11.97 to 1.6.98, was examined in light of Section 73 of the Finance Act, 1994. The Tribunal referred to the apex court's decision in CCE, Vadodara Vs Gujarat Carbon & Industries Ltd., emphasizing the necessity for the assessee to file returns under Section 70 for the application of Section 73. It was highlighted that the liability to file returns was introduced under Section 71-A in the Finance Bill, 2003, and prior to that, no notice could have been issued under Section 73 for non-filing of returns under Section 70.

The legal counsel for the Revenue contended that the view of CESTAT was unsustainable due to the retrospective operation of provisions. Conversely, the respondents' counsel supported the Tribunal's judgments. The judgment further referenced the case of Commissioner of Central Excise, Meerut-II v. L.H. Sugar Factories Ltd. and Ors., where the court agreed with the Tribunal's conclusions, emphasizing that Section 73 applies only to assesses liable to file returns under Section 70 or 71-A. The apex court, following the L.H. Sugar Factories decision, upheld the Tribunal's decision, concluding that the issue was settled against the Revenue, and hence rejected the appeal. The judgment reiterated the settled position based on judicial decisions, thereby affirming the Commissioner (Appeals) order and dismissing the appeal.