TMI Blog2002 (12) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... ections 68 and 70 of the Finance Act, 1994, directing them to furnish quarterly return in Form ST-3 and proposing recovery of interest for delayed payment of tax and proposing penal action under Sections 76, 77 and 79 of the Finance Act, 1994. 4. Prior to the issue of the notices, the validity of Rule 2(d)(xvii) of Service Tax Rules, 1994 was challenged before the Hon'ble Supreme Court and prior to the adjudication of the notices, the Apex Court held in the case of Laghu Udyog Bharti v. Union of India - 1999 (112) E.L.T. 365 (S.C.) that the Rule was ultra vires of the Act and accordingly quashed the Rule. In view of the Supreme Court judgment, the Deputy Commissioner, vide the various orders-in-original, dropped the show cause notices. The Commissioner of Central Excise directed issue of notices for revision of the orders of the Deputy Commissioner, in view of the retrospective amendment of Service Tax Rules by Section 117 of the Finance Act, 2000, which states that notwithstanding anything contained in any judgment, decree or order of any Court, Tribunal or other authority, sub-clause (xii) and (xvii) of clause (d) of sub-rule (1) of Rule 2 of Service Tax Rules, 1994 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aken or anything done notwithstanding anything contained in any judgment decree or order of any Court, Tribunal, or other authority. The Section also provided that sub-clause (xii) and (xvii) of sub- rule (1) of rule 2 of Service Tax Rules, 1994 shall be deemed to be valid at all material times. This position is also apparent from the notes on clauses of the Finance Bill, 2000 wherein it was mentioned that clause 113 (which was enacted as Section 117) of Finance Bill, 2000 seeks to give retrospective effect to the said sub-clauses of Service Tax Rules so as to validates the levy and collection of service tax on services rendered by goods transport operators and clearing and forwarding agents from the users of such services. It was also mentioned in the notes of clauses that section also seeks to deny refund of service tax to the users of such services consequent to overcome certain judicial pronouncements and for recovery of refunds already granted consequent thereto. Accordingly there is no substance in the submissions of the learned Advocate for the Appellants that Section 117 of the Finance Act, 2000, only seeks to deny refund of Service Tax to the users. As the show cause noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at other sections of the Finance Act, 2000, namely, Section 109, 110 and 112 relating to validation of past actions of other subject matters also provides for recovery of duties not collected whereas Section 117(2) of the Finance Act, 2000 does not contain similar provision, is not acceptable. 9. The contention of the appellants that Section 69 relating to registration and Section 70 relating to filing of returns were to be complied with during the period in question, only by the service provider and not by the service receiver is also without substance as both these sections stipulate that the person responsible for collecting the service tax shall apply for registration and furnish prescribed returns, and the person responsible for collecting the service tax in relation to services provided by a goods transport operator has been defined in Rule 2(1)(d)(xvii) as "every person who pays or is liable to pay the freight either himself or through his agent for the transportation of the goods by road in a goods carriage." Further Rule 4 of the Service Tax Rules, 1994 providing for registration also casts liability for application for registration on "every person responsible for co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here is no irregularity or illegality in the procedure followed but disagreed with the trial Court's finding that suspension resolution was ultra vires of the District Board. It thus dismissed the plaintiffs suit. The heirs and legal representatives of the plaintiff obtained leave to appeal and matter came to be heard by the Supreme Court constituted in 1950. The Supreme Court held as under : "(14) We are afraid we cannot agree with this line of reasoning adopted by the High Court. The defendants were a Board created by statute and were invested with powers which of necessity had to be found within the four corners of the statute itself. The powers of dismissal and suspension given to the Board are defined and circumscribed by the provisions of section 71 and 90 of the Act and have to be culled out from the express provisions of those sections. When express powers have been given to the Board under the terms of these sections it would not be legitimate to have resort to general or implied powers under the law of master and servant or under section 16 of the U.P. General Clauses Act. Even under the terms of section 16 of that Act, the powers which are vested in the authority to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t clear that the service receiver is liable to pay tax, apply for registration and file returns. In the case of Pokhardas Meghraj v. The State of Bombay and Another [1957] 008 STC 0758 the issue before the Hon'ble Bombay High Court was whether the provisions in the Bombay Sales Tax Rules, 1952 that purchase price is to be included in the taxable turnover of the purchasing period was ultra vires the rule making power. The High Court struck down the proviso to Rule 5(1)(vii) as well as Rule 5(ix)(II) of the Bombay Sales Tax Rules, 1952. The Court held that the word "sale" in Rule 5(1)(vii) means sale in Bombay and if there is no sale in Bombay there is a breach of the condition on which the goods attracted the deduction under that Rule. The Court applied the definition of sale in the Bombay Sales Tax Act, 1963 which defines the sale of goods made within the State of Bombay. The Court held that even if Section 51 of 1953 Sales Tax Act validated rules providing for inclusion of purchase price in the taxable turnover of the purchasing period, the Rule was still invalid on other grounds and therefore no tax can be levied on the petitioners under the rules under which the tax is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of taxable service has escaped the assessment by reason of omission or failure on the part of the assessee to make the return under Section 70 of any particular period. Further, Section 72 empowers the proper officer to make the assessment of the value of taxable service to the post of his judgment and determination the same payable by the assessee after he fails to make the return under Section 70 of the Act. A perusal of the show cause notice dated 12-5-1999 clearly reveals that the Appellants were only to called upon to show cause to the Assistant Commissioner as to why the penal action against them be not taken for non-filing the quarterly returns. The Appellants were not put on notice at all for non-making the Service Tax which has been since paid by them; that however, this fact of non-payment was duly mentioned in the show cause notice. As such the learned Advocate has rightly submitted that there was no proposal for payment of Service Tax, which was not paid by them. Section 84 of the Finance Act, 1994 empowers the Commissioner to call for the record of the proceedings which has been taken by the Assistant Commissioner/Deputy Commissioner and makes such inquiry and pass suc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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