TMI Blog2019 (3) TMI 449X X X X Extracts X X X X X X X X Extracts X X X X ..... cause notice. The only allegation of suppression made in the show cause notice is that the appellant did not file returns and did not pay tax. When there is no liability on the service recipient the appellant could not have been expected to file returns or pay tax. There is no positive act of suppression brought out from the facts or evidence placed - there are no ingredients for invocation of extended period and therefore the demand cannot sustain. Appeal allowed - decided in favor of appellant. - Appeal No. ST/169/2012 - Final Order No. 40407/2019 - Dated:- 7-3-2019 - Ms. Sulekha Beevi C.S., Member (Judicial) And Shri Madhu Mohan Damodhar, Member (Technical) Ms. Sushma Harini, Advocate for the Appellant Shri Jagan Babu, AC (AR) for the Respondent ORDER Per Bench Brief facts are that the appellants are manufacturers of cotton yarn. They engaged the services of transporters to transport the cotton yarn manufactured by them. The appellant did not pay service tax as a recipient of the service of erstwhile Goods Transport Operators Service during the period from 16.11.1997 to 1.6.1998. A show cause notice dated 30.8.2001 was issued for payment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansport operator as the person to pay the service tax. Thus it introduced liability for discharging service tax on the service recipient in the case of Goods Transport Operators Service. This was challenged before the Hon ble Supreme Court wherein the said Rule was held ultra vires. Thus the first show cause notice issued in 2001 is against law and therefore cannot sustain. It is the appellant s case that first show cause notice itself is issued invoking the extended period of limitation. The allegation is that appellant did not pay service tax or file returns and thereby has suppressed facts for which extended period is invoked. During the said period, there was no liability cast upon the service recipient to pay service tax. When there is no law for the service recipient to pay service tax during such period, the department cannot issue a show cause notice alleging that the appellant is guilty of suppression of facts. She argued that when the constitutional validity of the demand of service tax on the service recipient itself was challenged before the Apex Court and held to be ultra vires, the department cannot raise a demand invoking extended period under a shelter of retrospect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spective amendment. Therefore the second show cause notice has been issued after the amendment which fixed the liability on the service recipient to pay the service tax. The second show cause notice being validated under the statute, the confirmation of demand and interest is legal and proper. 5. Heard both sides. 6. We do not understand how the department could withdraw the show cause notice and issue a fresh SCN case for the very same period. The Larger Bench in the case of Agauta Sugar Chemicals has considered the validity of show cause notice issued and adjudicated after the amendment in 2003 / 2004. It did not discuss a situation in which a fresh show cause notice is issued, where already show cause notice is pending. On perusal of the adjudication order, we do take note of the fact that the adjudicating authority has started the order by stating that the proceedings arise out of show cause notice dated 30.8.2001. However, in the operative portion, it is stated by him that this show cause notice stands abated and treated as withdrawn due to issuance of the show cause notice dated 27.10.2004. 7. For easy discussion, the statutory / legal developments in this regard as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons on the basis thereof. 2003 (i) By Section 158 of the Finance Act, 2003, the provisions of the Act was modified with effect from July 16, 1997. A proviso was inserted below Section 68(1) making the customer of the goods transport operator 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 n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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