M/s. Ambika Cotton Mills Ltd. Versus Commissioner of GST & Central Excise, Madurai
Service Tax
2019 (3) TMI 449 – CESTAT CHENNAI – 2019 (25) G. S. T. L. 263 (Tri. – Chennai)
CESTAT CHENNAI – AT
Dated:- 7-3-2019
Appeal No. ST/169/2012 – Final Order No. 40407/2019
Service Tax
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 service tax of Rs. 479,751/- under section 73(a) of the Finance Act, 1994 besides demand of interest and propo
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e dated 27.10.2004 for demand of service tax for the period 16.11.1997 to 1.6.1998 which was covered in the earlier show cause notice issued in 2001. The second show cause notice issued in 2004 was taken up for adjudication and the Order in Original was passed confirming the demand along with interest. No penalties were imposed. In appeal, Commissioner (Appeals) upheld the same. Hence this appeal.
2. On behalf of the appellant, ld. counsel Ms. Sushma Harini appeared and argued the matter. She adverted to the Order in Original and argued that the original authority has stated in the said order that the proceedings arise out of show cause notice dated 30.8.2001. Though it is noted that the proceedings arise out of show cause notice which was issued earlier, later in the operative portion of the order, it is stated that the proceedings initiated by show cause notice dated 30.8.2001 abates and are treated as withdrawn. That these are contradictory. She explained when the earlier show caus
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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 retrospective amendment validating the recovery of service tax. The second show cause notice is for the same period which is covered in the earlier show cause notice issued invoking extended period.
3. Further, that even the retrospective amendment only validated the recovery of demand for which proceedings have been already initiated. In the present case, the show cause notice itself was issued when there was no authority to issue such notice and therefore the amendment will not help the department to contend that the
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nance (No.2) Act, 2004 brought in necessary changes in Section 73 empowering to issue notice in such occasion. These persons availing services of GTO during the relevant period were required by Finance Act,2 003 to pay service tax and file returns within six months from its enactment. This six months is from 14.5.2003 and to be paid before 13.11.2003. He referred to the decision of the Larger Bench of the Tribunal in the case of Agauta Sugar & Chemicals vs. Commissioner of Central Excise, Noida – 2010 (19) STR 849 (Tri.LB) and argued that in regard to service tax on transport service, the liability on the service recipient is authorized by the statute after its amendment and its collection from the recipients of the service is also authorized by the statute even for the past period by way of retrospective amendment. The Apex Court has upheld the validity of such retrospective amendment. Therefore the second show cause notice has been issued after the amendment which fixed the liability
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For easy discussion, the statutory / legal developments in this regard as summarized in the case of Agauta Sugar & Chemicals (supra) is reproduced as under:-
“5. For a better understanding of the issues involved in these cases, we briefly indicate the statutory/legal developments that have taken place from time to time in respect of levy on goods transport service :-
1997
(i) Goods transport service was made taxable vide Section 65(4)(m) by amendment of the Finance Act, 1994 by the Finance Act, 1997.
(ii) The levy was to become effective upon notification in terms of Section 66(3) of the Act.
(iii) Under Section 68(1A), service tax was to be collected from such person and in such manner as was to be prescribed and such person was to be treated as the person responsible for collecting the Service tax.
(iv) By notification bearing No. 41/97-S.T., dated November 5, 1997, the levy was made effective from November 16, 1997.
(v) By Notification bearing No. 42/97-S.T., dated November
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ions of the Act were amended to provide for levy of service tax on goods transport service for the period July, 16, 1997 to August 1, 1998. The definitions of “assessee” and “taxable service” and the charging and valuation Sections 66 and 67 were amended and definitions of “goods carriage” and “goods transport operator” were inserted.
(ii) Section 117 of the Finance Act, 2000 validated Rule 2(1)(d)(xvii) and previous actions 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 th
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tion put forward by the ld. counsel for appellant is on the ground of limitation. She submitted that the earlier show cause notice dated 30.8.2001 was issued for the period 16.11.1997 to 1.6.1998 alleging suppression of facts and invoking the extended period of limitation. It has to be noted that when the earlier show cause notice was issued, there was no liability cast upon the service recipient to discharge service tax under Goods Transport Operators Service. The said issued travelled upto the Apex Court and in the decision of Laghu Udyog Bharati (supra), the Apex Court had held that recovery could not be made from the service recipient unless there is a liability cast by the statute. Show cause notice dated 27.10.2004 is also on the similar set of facts as alleged in the earlier show 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 app
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