Case Law Details
Tube Investments of India Ltd. Vs Commissioner of Central Excise and Service Tax (CESTAT Chennai)
Second Show Cause Notice Valid as Service Tax Demand Was Within Limitation; No Interest on GTO Service Tax When Return Filed Before Deadline; Retrospective Amendments Upheld: CESTAT Confirms Service Tax on Goods Transport Service Recipients; CESTAT Rejects Limitation Challenge Against GTO Service Tax Demand Due to Amended Section 73.
In Tube Investments of India Ltd. Vs Commissioner of Central Excise and Service Tax, the Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) partly allowed the appeal by holding that service tax on Goods Transport Operator (GTO) services for the period from 16-11-1997 to 01-06-1998 was payable by the appellant, but interest was not leviable because the return had been filed within the prescribed period.
The appellant, a manufacturer of steel tubes, had availed services of Goods Transport Operators during the relevant period. Following amendments introduced through the Finance Act, 2000, a show cause notice dated 11-04-2002 was issued demanding service tax along with interest and penalties. The appellant contested the demand on grounds including limitation and absence of statutory liability during the relevant period. Subsequently, after the Finance Act, 2003 introduced Section 71A and related provisions, the appellant filed Form ST-3B on 12-11-2003 and paid service tax of Rs. 2,34,325 under protest. Later, a refund claim was filed contending that the payment was made under mistake of law and relying upon judicial precedents.
Thereafter, another notice dated 08-11-2004 was issued invoking Section 73 of the Finance Act, 1994. The appellant argued that issuance of a second show cause notice for the same cause of action was impermissible, that Section 73 was not applicable to persons filing returns under Section 71A, and that extended limitation could not be invoked. It was further contended that interest was not payable because the return had been filed within six months from 13-05-2003 as required under Rule 7A.
The Tribunal examined the legislative history relating to levy of service tax on Goods Transport Operators, including the decisions in Laghu Udyog Bharati, L.H. Sugar Factories, and Gujarat Ambuja Cements Ltd., along with the retrospective amendments introduced by the Finance Acts of 2000 and 2003. The Tribunal noted that the Supreme Court in Gujarat Ambuja upheld the constitutional validity of the levy on recipients of GTO services and recognised the competence of Parliament to retrospectively validate the levy.
The Tribunal relied extensively on the judgment of the Madras High Court in CCE, Puducherry v. CESTAT, Chennai, which held that after amendment of Section 73, second show cause notices issued within one year from 13-11-2003 were valid and not barred by limitation. The High Court had also clarified that such notices were necessary because earlier unamended Section 73 did not cover persons falling under Section 71A. Based on this precedent, the Tribunal rejected the appellant’s contention regarding invalidity of the second show cause notice and limitation. It further held that although the notice referred to the extended period under the proviso to Section 73(1), the demand was nevertheless within the normal limitation period, and no prejudice had been caused to the appellant.
The Tribunal also referred to the Madras High Court judgment in EID Parrys India Ltd. v. CESTAT, Chennai, where it was held that recipients of GTO services were liable to pay service tax and were not entitled to refund once the tax had already been paid. Accordingly, the Tribunal held that the appellant was not entitled to refund of the service tax paid.
However, on the issue of interest, the Tribunal accepted the appellant’s contention. It observed that Rule 7A required returns to be filed within six months from 13-05-2003, i.e., on or before 13-11-2003. The appellant had filed the return on 12-11-2003, within the prescribed period. The Tribunal also noted that the Supreme Court had further extended the time by two weeks from 17-11-2003. Therefore, the Tribunal held that interest was not leviable and that the appellate authority erred in upholding the interest demand.
Accordingly, the Tribunal upheld the demand of service tax but set aside the interest component. The appeal was partly allowed with consequential reliefs, if any
FULL TEXT OF THE CESTAT CHENNAI ORDER
Tube Investments of India Ltd, the Appellant herein, is challenging the Order in Appeal No. 112/2016 dated 25-10-2016 passed by the Commissioner (Appeals), LTU, Chennai (impugned order).
2. Brief facts are that the Appellant is a manufacturer of steel tubes and was availing the service rendered by Goods Transport Operators during the period 16-11-1997 to 01-06-1998.
3. Consequent to the Finance Act, 2000, the Appellant was issued a Show Cause Notice (SCN) dated 11-04-2002 proposing to demand service tax on the value of the taxable services rendered to the Appellant by the goods transport operators during the period from 16-11-97 to 16-98 under Section 73 (a) of the Finance Act 1994 (Act) along with applicable interest and proposing penalties under Section 76 , 77 and 78 of the act for nonpayment of service tax and non-filing of returns.
4. The Appellant, in its reply dated 13-05-2002, inter-alia stated that there cannot be any omission or failure to make a return or disclose material facts, as during the relevant time there was no such requirement to do so. Further, it was contended that there appeared to be no specific provision requiring the service receivers of goods transport to deposit service tax in case they had failed to do so earlier during the period in question to which the retrospective effect of Section 116 applies. It was therefore contended that the demand raised in the SCN is barred by limitation as the period involved in the present case is from 16-07-1997 to 31-08-99 and the SCN has been issued on 11-04-2002, which is beyond the period of limitation.
5. However, consequent to the Finance Act, 2003, the Appellant vide its letter dated 10th November 2003 filed on 12th November 2003, referring to the SCN dated 11.04.2002, furnished the return mandated by Section 71A read with Rule 7A of the Service Tax Rules, 1994 in the prescribed Form No. ST-3B, which return was dated 12th November 2003. The Appellant also paid service tax of Rs.2,34, 325/- vide challan dated 10th November 2003, albeit under protest, in the absence of any SCN having been issued to them prior to the enactment of Finance Act,2000.
6. The Appellant thereafter, on 23.09.2004, filed a refund claim for the said amount stating that it was a payment made under mistake of law and contending that the decision of the Tribunal reported in 2004 (165) ELT 161 would be applicable to them and the SCN issued invoking 73 is not maintainable in law.
7. The Department thereafter on 08-11-2004, issued a notice narrating, inter-alia, the statutory changes in the provisions as well as the changes brought about vide Finance Act 2003, including Section 71A, Rule 7A inserted in the Service Tax Rules and stating that in view of the statutory provisions, the Appellant was required to furnish the prescribed return in respect of the service tax payable by 13-11-2004 and also pay the service tax. It was further noticed that the Appellant had filed the return on 12.11.2003 and the Notice went on to demand the service tax of Rs.2,34,325/- invoking proviso to Section 73(1) of the Act.
8. The Appellant vide its reply, inter-alia, contested the demand pointing out that there has been no adjudication of the earlier SCN dated 11.04.2002 and under these circumstances the subsequent notice dated 08.11.04 is not called for and cannot be maintained in law. It was also pointed out that the Appellant had paid the stated dues vide challan dated 10.11.2003 and that the Appellant had also filed return in total compliance of Section 71A and that therefore there is no question of levying any interest or penalty as proposed in the notice. It was further contended that there could not have been an allegation of suppression in the given circumstances. After due process of law, the Adjudicating Authority, vide Order in Original dated 16.05.2014, confirmed the demand. Aggrieved, the Appellant preferred an appeal before the Commissioner (Appeals), LTU, Chennai. The Appellate Authority, noticing that the constitutionality of the amended provisions has been upheld by the Apex Court in Gujarat Ambuja Cement case, as well as Section 71A and the Service Tax (Amendment) Rules 2003 that required an assessee in case of service provided by goods transport operator for the period from 16th Day of November 1997 to 2nd day of June 1998 to furnish a return within a period of six months from the 13th May 2003 failing which the interest and penal consequences as provided in the Act shall follow, thereafter held vide the impugned order that the service tax paid on the basis of self-assessment as per the statutory provision was a valid collection of tax and went on to reject the Appeal preferred by the Appellant. Hence this Appeal.
9. Ms. Samyuktha Banusekar, Ld. Advocate appearing for the Appellant, made detailed submissions, taking us through the sequence of events leading upto the present Appeal. Ld. Counsel contended that the Appellant cannot be vexed with two SCNs for the same cause of action and when the prior SCN on the very same issue was issued, the second notice cannot be issued for the same dispute. Reliance was placed on the decision in M/s. Reliance Securities Ltd v Commissioner of CGST, Mumbai, 2024 (7) TMI 68, Anglo French Textiles v CESTAT, Chennai, 2018 (362) ELT 576 (Mad) and M/s. Veejay Enterprises v The Commissioner of Central Excise, Bangalore III, 2024 (7) TMI 616-CESTAT, Bangalore.
10. Ld. Counsel further argued that in the instant case the impugned order is a result of the SCN dated 08.11.2004 which has been issued alleging suppression of facts and invoking the extended period of limitation under Section 73 of the Finance Act, 1994. It was argued that in light of the decision of the Hon’ble Supreme Court in Laghu Udyog, the Apex Court had held that recovery could not be made from the service recipient unless there is a liability cast by the statute and hence the Appellant is not liable to pay service tax for the receipt of GTO services for the impugned period. Thus, when there is no liability to pay tax, the Appellant could not have been expected to file returns or pay tax and therefore the grounds for invoking the extended period of limitation could not have been invoked in the present case. Reliance was placed on the decision in Ambika Cotton Mills Ltd v Commissioner of GST & Central Excise, 2019 (25) GSTL 263 (Tri-Chennai).
11. Ld. Counsel also contended, without prejudice to the main contention that extended period of limitation cannot be invoked and two SCNs cannot be issued for the very same cause of action, that Section 73 is not invokable where Appellant has a liability to file return under Section 71A placing reliance on the decision in L.H. Sugar Factories Ltd v CCE, 2004 (165) ELT 161 (Tri-Del) affirmed by the Supreme Court in CCE v L.H. Sugar Factories Ltd, 2006 (3) STR 715 (SC).
12. Ld. Counsel further contented that in terms of Rule 7A of the Finance Act, 2003, interest was applicable only if the return is filed after six months from 13th May 2003 and in the instant case the return is filed on 12.11.2003 which is within the six month period. It was submitted that interest is not leviable in the present case. Reliance was placed on the decisions in V.G. Paper Boards Ltd v CCE, 2007 (8) STR 53 (Tri-Chennai) and Pentokey Organy (I) Ltd v CCE, 2016 (46) STR 486 (Tri-Chennai). It was prayed that the Appeal be allowed.
13. Mr. N. Satyanarayana, Ld. Authorised Representative, appearing for the Respondent, reiterated the findings in the impugned order. Ld.A.R. submits that the Appellate Authority has relied on the Apex Court decision in Gujarat Ambuja’s case and since the Appellant itself has self-assessed and paid the applicable tax while also filing the returns as mandated under Section 71A, the Appellant cannot now contend that the demand of what was paid as confirmed, is untenable. It is argued that the Appeal be rejected as without merits.
14. We have heard the rival submissions, perused the appeal records and the citations submitted.
15. The sole issue that arises for our consideration is whether the confirmation of service tax demand made on the Appellant on the value of the taxable services rendered to the Appellant by the goods transport operators during the period from 16-11-97 to 1-6-98 demanded under SCN dated 08.11.2004, is tenable.
16. To appreciate the matter in its proper perspective, it is necessary to notice the changes in the levy of service tax on Goods Transport Operators over the years, and hence while noticing the contentions of the appellant in the narrative, these too are interspersed infra.
17. Section 88 of the Finance Act 1997 inter alia, provided for levy of service tax on the services rendered to goods transport operators which came into effect on 16-11-1997 vide Notification No.41/97-ST dated 05-11-97. However, vide Notification No.42/97-ST dated 05-1197, in relation to services provided by a goods transport operator, every person who pays or is liable to pay the freight either himself or through his agent for the transportation of goods by road in a goods carriage was made liable to collect the service tax vide insertion of sub-clause (xvii) in clause (d) of sub-rule 1 of rule 2 of the Service Tax Rules, 1994. As per Notification No.43/97 – ST dated 05-11-97, service tax on goods transport operator service was exempted, except when provided to 8 specified categories of persons, which includes a company established under the Companies Act, 1956. The levy was subsequently exempted vide Notification No.49/98 – ST dated 02-0698. Hence, service tax was payable on the services provided by GTOs during the period from 16-11-97 to 01-06-98.
18. The vires of Rule 2(1)(d) of the Service Tax Rules was under challenge in the Hon’ble Supreme court in the case of Laghu Udyog Bharati v UOI, 1999 (112) ELT 365 (SC), and the Apex Court inter-alia, held that the provisions of Rule 2(1)(d) ibid in so far as it made persons other than the goods transport operators responsible for collecting service tax is ultra vires the Finance Act, 1994.
19. Thereafter, Finance Act, 2000 made amendments to the relevant provision relating to the Service Tax provision with retrospective effect. Section 116 of the Act ibid amended Section 65(6) with effect from 167-1997 to 16-10-1998, which defined an assessee to mean a person who is liable for collecting service tax to include in relation to services provided by a goods transport operator, every person who pays or is liable to pay the freight either himself or through his agent for the transportation of goods by road in a goods carriage. Section 117 of the Finance Act, 2000 sought to retrospectively validate the taxes collected earlier under the Service Tax Rules, which the Honourable Supreme Court had directed to be refunded in the case of Laghu Udyog Bharati v. Union of India upon such demand for refund being made and also sought to recover any refund that has been so made.
20. Consequent to the Finance Act, 2000, the Appellant was issued a Show Cause Notice (SCN) dated 11-04-2002 proposing to demand service tax on the value of the taxable services rendered to the Appellant by the goods transport operators during the period from 16-11-97 to 16-98 which was contested by the Appellant in its reply dated 13-05- 2002. It is contended by the Appellant that the said SCN was not adjudicated.
21. Consequent to these amendments vide Finance Act 2000, when SCNs came to be issued, they were challenged by the assessees and one such challenge was pending before the Delhi Tribunal in the case of L.H. Sugar Factories. In the interregnum, Finance Act, 2003 brought in further amendments and by Section 158 of the Finance Act, 2003, subsection (1) of Section 68, Sections 71, 73 and 94 of the 1994 Act were further amended. In addition to this, Section 71A of the Act was inserted with retrospective effect from 16-7-1997. By clause (ii) to proviso to Section 68 (1), it was provided that in relation to services provided by goods transport operator, every person who pays or is liable to pay the freight either himself or through his agent for the transportation of goods by road in a goods carriage for the period commencing on and from the 16th day of November, 1997 and ending with the 2nd day of June, 1998,shall be deemed always to have been a person liable to pay Service Tax, for such services provided to him, to the credit of the Central Government. The newly inserted Section 71A provided that notwithstanding anything contained in the provisions of Sections 69 and 70, the provisions thereof shall not apply to a person referred to in the proviso to sub-section (1) of Section 68 for the filing of return in respect of Service Tax for the respective period and service specified therein and such person shall furnish return to the Central Excise Officer within six months from the day on which the Finance Bill, 2003 receives the assent of the President in the prescribed manner on the basis of the self-assessment of the Service Tax and the provisions of Section 71 shall apply accordingly.
22. The Delhi Bench of the Tribunal in the H.Sugar Factories case, 2004 (165)ELT 161 (Tri-Del), noted that the Apex Court in its Judgement in Laghu Udyog Bharati has held that the return which has to be filed pertains to the payment which are received by the person rendering the service in respect of the value of the taxable services and that by rules which are framed, the person who is receiving the services cannot be made responsible for filing the return and paying the tax. The Tribunal held therein that as far as service receiver like the Appellant therein are concerned there was no date for filing return and that therefore the Appellant are fully justified in contending that no show cause notice could have been issued against them under Section 73 as it stood on the date of issue of show cause notice. Further, the Tribunal also took note of the amendments introduced by the Finance Act 2003 and went on to hold that even the amended Section 73 takes in only the case of assessees who are liable to file return under Section 70. Admittedly, the liability to file return is cast on the Appellant only under Section 71A. The class of persons who come under Section 71A is not brought under the net of Section 73. The above being the position show cause notices issued to the Appellant therein invoking Section 73 are not maintainable. The Apex Court in its decision in CCE, Meerut II v. L.H. Sugar Factories Ltd, 2005 (187) ELT 5 (SC), agreed with the conclusion of the Tribunal and dismissed the Revenue’s appeal against the Tribunal decision.
23. For the sake of completeness, it is also noticed that the challenge to the amendments made vide the Finance Act, 2003, was negated by the Apex Court in its Judgement in Gujarat Ambuja Cements Limited v. Union of India, 2006 (3) STR 608 (SC), holding as under:
“23. As we have said, Rule 2(1)(d) (xii) and (xvii) had been held to be illegal in Laghu Udhyog Bharati only because the charging provisions of the Act provided otherwise. Now that the charging section itself has been amended so as to make the provisions of the Act and the Rules compatible, the criticism of the earlier law upheld by this Court can no longer be availed of. There is thus no question of the Finance Act, 2000 overruling the decision of this Court in Laghu Udhyog Bharati as the law itself has been changed. A legislature is competent to remove infirmities retrospectively and make any imposition of tax declared invalid, valid. This has been the uniform approach of this Court. Such exercise in validation must of course also be legislatively competent and legally sustainable. Those issues are considered separately. On the first question, we hold that the law must be taken as having always been as is now brought about by the Finance Act, 2000. The statutory foundation for the decision in Laghu Udhyog Bharati has been replaced and the decision has thereby ceased to be relevant for the purposes of construing the present provisions (vide Ujagar Prints v. Union of India). Therefore, subject to our decision on the question of the legislative competence of Parliament to enact the law, and assuming the amendments in 2003 to be legal for the time being, we reject the submission of the writ petitioners that by the amendments brought about by Sections 116 and 117 of the Finance Act, 2000, the decision in Laghu Udhyog Bharati has been legislatively overruled.”
24. The Apex Court then went on to hold that the Central Government is legally competent to evolve a suitable machinery for collection of the service tax subject to the maintenance of a rational connection between the tax and the person on whom it is imposed and by Sections 116 and 117 of the Finance Act, 2000, the tax is sought to be levied from the recipients of the services and that they cannot claim that they are not connected with the service since the service is rendered to them. However, while rejecting the challenge to the constitutional validity and legality of the levy of service tax, the Apex Court also noted that it has been conceded by the Union of India that the amendments made in the Act would have to be read alongwith the notifications so that the levy and collection of service tax would be only in respect of services rendered by goods transport operators between the period from 16th November, 1997 to 2nd June, 1998. It was also held that the liability to pay interest or penalty on outstanding amounts will arise only if the dues are not paid within the period of two weeks from the order passed by the Apex Court on 17th November, 2003. In those cases, in which the tax may have been paid but not refunded to the writ petitioners, for whatever reason, there is no question of levy of any interest or penalty at all.
25. It is also pertinent to note that Section 73 of the Finance Act 1994 was substituted by Finance (No.2) Act, 2004, whereby Section 73 (6) (i)(a) provided inter-alia that for the purposes of the section in case of taxable service in respect of which Service Tax has not been levied or paid or has been short-levied or short paid, whereunder the rules made under this Chapter, a periodical return, showing particulars of Service Tax paid during the period to which the said return relates, is to be filled by an assessee, the date on which such return is so filed.
26. However, as noticed supra, consequent to the Finance Act, 2003, the Appellant vide its letter dated 10th November 2003, furnished the return mandated by Section 71A read with Rule 7A of the Service Tax Rules, 1994 in the prescribed Form No. ST-3B and also paid service tax of Rs.2,34, 325/- vide challan dated 10th November 2003. Thereafter, the Appellant was issued the SCN dated 08.11.2004 in which is the genesis of this Appeal inasmuch as pursuant to the Appellant’s reply to the SCN, the demand stood confirmed by the adjudicating authority and upheld by the Appellate Authority in the impugned order.
27. The principal contention of the Ld. Counsel is that the second SCN dated 08-11-2004 could not have been issued as the earlier SCN dated 11-04-2002 is stated to have remained unadjudicated. It is also her contention without prejudice to the above that the Supreme Court ruling in L.H. Sugar Factories case upheld the position in law that the SCN issued under Section 73 is procedurally illegal and non-maintainable against the service recipient for this specific period when it rejected the appeal against the decision of the Delhi bench of the Tribunal. The Tribunal had recognized that while the retrospective amendments vide Finance Acts 2000 & 2003, validated the tax levy by amending Section 68, they also created a separate obligation for the recipient to file a return under Section 71A. Section 73, however, was framed to address failure of the service provider’s obligation to file returns under Section 70 whereas the Appellant’s specific return liability was under Section 71A and not Section 70. Therefore, the mechanism chosen by the Department, issuance of the SCN under Section 73, was used against the wrong class of assessee. The Supreme Court had also affirmed that the class of persons who come under Section 71A is not brought under the net of Section 73. It is also contended that the extended period of limitation could not have been invoked in the SCN and in any event, there could have been no liability to interest and penalty on the Appellant.
28. We find that the issue is no more res-integra and it is noticed that a Division Bench of the jurisdictional High Court in CCE, Puducherry v. CESTAT, Chennai, 2014 (35) STR 32 (Mad) while answering inter-alia, a question whether or not the show cause notice issued under Section 73 includes person falling under Section 71A in view of the Supreme Court laying down the law in the cases of Gujarat Ambuja Cements Ltd. and L.H. Sugar Factories Ltd, has observed in para 4 as under:
“4. The legal issue which requires to be considered in all these appeals are with regard to the effect of Sections 68, 71A and 73 of the Finance Act, 1994, as amended with effect from 10-9-2004 and Rule 6 and Rule 7A of the Service Tax Rules and their applicability. The further question would be regarding the applicability of the decision of the Tribunal in the case of L.H. Sugar Factories Ltd., as confirmed by the Hon’ble Supreme Court in the case of Commissioner of Central Excise, Meerut-II v. L.H. Sugar Factories Ltd., reported in 2005 (187) E.L.T. 5 (S.C.) = 2006 (3) S.T.R. 715 (S.C.). The other question which also requires to be considered is with regard to the effect of the decision of the Hon’ble Supreme Court in the case of Gujarat Ambuja Cements Ltd. v. Union of India reported in 2005 (182) E.L.T. 33 (S.C.) = 2006 (3) S.T.R. 608 (S.C.).
29. Thereafter, the Hon’ble High Court has exhaustively analysed the various provisions of the Finance Act 1994 as well as examined the statutory changes; right from the amendment to Section 65, extending the meaning of ‘taxable services’ to include 18 different services, including the service to a customer of a ‘Goods Transport Operator’ in relation to ‘carriage of goods’ by road in a ‘goods carriage’, thereby bringing the included services also within the umbrella of ‘Service Tax’ liability, through the Judgements of the Apex Court in Laghu Udyog Bharati case, the decision of the Tribunal in L.H. Sugar Factories case as affirmed by the Apex Court, the amendments brought about by the Finance Act, 2003, the decision of the Apex Court in Gujarat Ambuja case, upto and including the substitution of Section 73 by the Finance Act, 2004; in paragraphs 6 to 26 of the said Judgement, and thereafter went on to hold as under:
“27. To clarify further, Section 73A of the Act was introduced by Finance Act, 2006, with effect from 18-4-2006, to specify situations where Service Tax is payable by a person, and to provide for recovery procedure in respect of such amount due. In terms of sub-section (1) of Section 73A, any person who is liable to pay Service Tax and has collected any amount in excess of the Service Tax assessed or determined and paid on any taxable service from the recipient of taxable service, shall forthwith pay the amount so collected, to the credit of the Central Government. Likewise, in terms of sub-section (2), where any person who has collected any amount which is not required to be collected in any manner as representing Service Tax, shall forthwith pay the amount to the credit of the Central Government. Sub-section (3) deals with the power of the Central Excise Officer to issue a show cause notice for non-compliance of provisions of sub-section (1) or sub-section (2) of Section 73A of the Act. On receiving a reply to such show cause notice, the Central Excise Officer shall determine the amount in terms of subsection (4) of Section 73A. Sub-section (5) of Section 73A provides for adjustment of the amounts paid under sub-section (1) or sub-section (2) or sub-section (4) against the Service Tax payable by the person on finalisation of assessment. Upon such adjustment, if there is any surplus amount left, the same shall, in accordance with subsection (6) of Section 73A, be credited to the consumer welfare fund referred to in Section 12C of the Central Excise Act, 1944, or refunded to the person who has borne the incidence of such amount in accordance with Section 11B of the said Act and such person is entitled to make an application for refund within six months from the date of Public Notice. So far as cases filed under Section 73A of the Act is concerned, it is governed by sub-section (6) of Section 73 of the Act, which states that the dates on which Service Tax is to be paid under the said Chapter or Rules made therein, shall be the relevant date for the purpose of Section 73(1) of the Act.
28. Rule 7A of the Service Tax Rules, 1994, deals with returns in case of taxable service provided by Goods Transport Operators and Clearing and Forwarding Agents. The amendment to the said Rule was introduced by Service Tax (Amendment) Rules, 2003, with effect from 14-5-2003, which coincides with the amendment with the date of insertion of Section 71A of the Act. Rule 7A starts with a non obstante clause, stating that notwithstanding anything contained in Rule 7, which deals with returns, an assessee in the case of service provided by the Goods Transport Operators for the period commencing on and from 16- 11-1997 to 2-6-1998, shall furnish a return, from 13-5-2003. The significance of fixing the period from 13-5-2003 is on account of the Presidential assent given for insertion of Section 71A as well as for modification of Section 68 which was made on 14-5-2003. Thus, on a cumulative reading of Section 68, as amended, Section 71A, as inserted, and Sections 73 and 74 substituted, read with Rule 7A of the Service Tax Rules, 1994, it is evidently clear that such of those persons who have availed the service of Goods Transport Operators between the period from 16-11-1997 and 2-6-1998, were liable to file return and the period within which they had to file return was within a period of six months and the period was to commence from 14- 5-2003. The six months’ period in such cases, comes to end on 13-11-2003.
29. We have noticed that the procedure to be followed is a self-assessment procedure, by which, the assessee is bound to pay service tax in terms of Rule 6(1), by the 6th day of the month, if the duty is deposited electronically and by the 5th day of the month, in any other case. In terms of Rule 7(1), every assessee shall submit a half-yearly return in Form ST-3 or ST- 3A, along with a copy of Form TR-6, in triplicate, for the months covered in the half-yearly return. Therefore, in cases where persons who have availed service of Goods Transport Operators during the said period, i.e., 16-11-1997 to 2-6-1998, and such of those who have failed to file return and pay tax on or before 1311-2003, are liable to be proceeded with.
30.Now the question to be considered is as to whether the show cause notices issued to the respondents, seeking to recover Service Tax under Section 73(1A) of the Finance Act, 1994, as amended with effect from 10-9-2004, for failure to pay Service Tax and file return as required by the proviso to Section 68(1) and 71A of the Finance Act, 1994, read with Rule 7A of the Service Tax Rules, 1994, could be sustained as within the period of limitation. As per the provisions, the Assistant Commissioner of Central Excise may, within a period of one year from the relevant date, serve notice on the persons who have not paid tax or on whom tax has not been levied. The relevant date for this case would be the date on which Service Tax is to be paid under the said Chapter or Rules made thereunder. The Service Tax was payable along with the return on or before 13- 11-2003 and therefore, the period of one year shall be from 13-11-2003 to 12-11-2004. In the interregnum, if show cause notices have been issued, they are valid in the eye of law and they are not barred by limitation.” (emphasis supplied)
30. Thereafter, the Hon’ble High Court has at the tabulation in para 31 of the said Judgement, shown the initial SCN issued by the Revenue as well as the protective show cause notices issued within the period of one year from the date when the service tax was payable along with the return on or before 13-11-2003, that is between 13-11-2003 and 12-11-2004. The High Court then went on to hold as under:
“32. In the background of the above facts, we have no hesitation in holding that the notices have been issued as provided under Section 73 of the Act.” (emphasis supplied)
31. Further the jurisdictional High Court in para 45 of the said decision in CCE, Puducherry case referred above, has specifically held as under: “45. As regards the contention of the learned counsel for the assessees that the show cause notices were issued prior to the amendment of Section 73 of the Finance Act, the same is evident from the reading of the tabulation that all the initial notices were issued on the following dates viz., on 8-3-2004 in C.M.A No. 562 of 2009; on 8-5-2002 in C.M.A No. 1308 of 2009; on 27-8-2002 in C.M.A No. 1315 of 2009; on 8-52002 in C.M.A No. 1330 of 2009; on 8-5-2002 in C.M.A No. 1422 of 2009; on 8-3-2004 in C.M.A No. 3490 of 2009 and on 12-8-2002 in C.M.A No. 660 of 2010. Thus, the initial notices referred above were issued prior to the amendment of Section 73 of the Act. After the decision of the Honourable Apex Court holding that the unamended Section 73 of the Act would not cover the case of Section 71A of the Act, the Revenue had issued second notice under Section 73 of the Act, after its amendment, by reason of which alone, the Revenue was vested with the jurisdiction to pass orders of assessment on the return filed by the assessee.” (emphasis supplied)
32. In our considered view, the contention of the Appellant as regards the tenability of two SCNs issued for the same cause of action and the contention that the SCN dated 08-11-2004 is time barred has been straight up answered by the Hon’ble High Court in its Judgement Supra as noted above, and are therefore liable to be rejected as misconceived. We also find that the contention of the Appellant that the said Notice dated 08-11-2004 has wrongly invoked the extended period of limitation under Section 73 of the Finance Act, 1994 in the SCN as the grounds for invoking extended period of limitation cannot be invoked in the present case, is at best a citing of a wrong provision of law. Since the Service Tax was payable along with the return on or before 13- 11-2003, therefore, the period of one year from the relevant date was from 13-11-2003 to 12-11-2004, and thus the Notice dated 08-11-2004 itself was within the normal period of limitation. Further, we also find that the Adjudicating Authority has confirmed the demand only under Section 73 (1) and had not invoked the proviso to Section 73 to confirm the demand. Furthermore, the Adjudicating Authority has also dropped the penal proceedings for contravention of the deeming provisions. We are therefore of the considered view that, as such, the mere citing of the wrong provision, namely the proviso to Section 73 (1) in the SCN dated 08-11-2004, has not caused any prejudice to the Appellant in any manner and therefore the objection on this count is untenable.
33. We also notice that the Jurisdictional High Court in a decision reported as EID Parrys India Ltd v. CESTAT, Chennai, 2015 (39) STR 968, was dealing with an issue where the assessee who had availed the services of Goods Transport Operators had paid the service tax under protest and had claimed refund. The claim was rejected by the Original Authority and on an appeal preferred by the assessee, was allowed by the Commissioner (Appeals). But the Tribunal, on the appeal filed by the Revenue, restored the order of the Original Authority declining to grant refund. While deciding the issue, the High Court noticed that in the aforesaid decision in CCE, Puducherry v. CESTAT, Chennai, 2014 (35) STR 32 (Mad) the Court had held that the demand raised by the Revenue on the users, who received the service of the Goods Transport Operators, was valid. It was further noticed that following the said decision and another (C.M.A. Nos. 1308 of 2009 batch dated 31-10-2013), the Court in C.M.A. No.1322 of 2009 dated 4-9-2014 held that the show cause notices issued by the Revenue on the assessee, who received the services of the Goods Transport Operators, was valid. Thereafter, the Hon’ble High Court went on to hold as under:
“9. In the present case, the assessee had paid the service tax and claimed refund. Hence, the only issue that arise for consideration in the above appeals is whether the appellant is entitled for refund of the service tax already paid.
10. It is seen that in the case of Gujarat Ambuja Cements Ltd. Union
of India reported in 2006 (3) S.T.R. 608, the Supreme Court upheld the validity of the levy of service tax on users of services rendered by Goods Transport Operators. The Supreme Court, while dealing with the legislative competency of the levy of service tax on users of services rendered by goods transport operators, held as follows:
“23. As we have said, Rule 2(1)(d) (xii) and (xvii) had been held to be illegal in Laghu Udhyog Bharati only because the charging provisions of the Act provided otherwise. Now that the charging section itself has been amended so as to make the provisions of the Act and the Rules compatible, the criticism of the earlier law upheld by this Court can no longer be availed of. There is thus no question of the Finance Act, 2000 overruling the decision of this Court in Laghu Udhyog Bharati as the law itself has been changed. A legislature is competent to remove infirmities retrospectively and make any imposition of tax declared invalid, valid. This has been the uniform approach of this Court. Such exercise in validation must of course also be legislatively competent and legally sustainable. Those issues are considered separately. On the first question, we hold that the law must be taken as having always been as is now brought about by the Finance Act, 2000. The statutory foundation for the decision in Laghu Udhyog Bharati has been replaced and the decision has thereby ceased to be relevant for the purposes of construing the present provisions (vide Ujagar Prints v. Union of India).”
11. From a reading of the abovesaid decision of the Supreme Court and that of this Court, it is clear that the users of the service rendered by the Goods Transport Operators are liable to pay service tax. In the present case, the appellant is using the services of the Goods Transport Operators during different periods between 1997 to 1999. Hence, the appellant is liable to pay service tax. Since the appellant has already paid the service tax, as per the law laid down by the Supreme Court in the case of Gujarat Ambuja Cements Ltd. Union of India reported in 2006 (3) S.T.R. 608, the question of refund will not arise and the appellant is not entitled for refund. Hence, the Tribunal is justified in confirming the order of the Original Authority declining to grant refund
(emphasis supplied)
This Judgement, to our mind, puts paid to any hope of any refund arising in such circumstances.
34. The decisions relied upon by the Ld. counsel., namely, M/s. Reliance Securities Ltd v Commissioner of CGST, Mumbai, 2024 (7) TMI 68, Anglo French Textiles v CESTAT, Chennai, 2018 (362) ELT 576 (Mad) and M/s. Veejay Enterprises v The Commissioner of Central Excise, Bangalore III, 2024 (7) TMI 616-CESTAT, Bangalore, in our considered opinion, differ in material respects from the dispute before us and in the light of the aforesaid decisions of the Jurisdictional High Court does not further the case of the appellant in any manner and are hence inapplicable.
35. However, we find merits in the contention of the Ld. Counsel that in the instant case the Appellant had filed the return on 12.11.2003 which is within the six months period and hence interest is not leviable on the appellant. We notice that Rule 7A as inserted vide Notification No.4/2003-ST dated 14-05-2003 itself provided that an assessee, in case of service provided by goods transport operator for the period commencing on and from the 16th day of November, 1997 to 2nd day of June, 1998 shall furnish a return within a period of six months from the 13th day of May, 2003, in Form ‘ST-3B’ alongwith copy of Form TR-6 in triplicate, failing which the interest and penal consequences as provided in the Act shall follow. Therefore, the period prescribed was on or before 13-11-2003. This period was extended by the Honourable Supreme Court, by order dated 17-11-2003 for a period of two weeks with effect from the date of the order, as was noticed in the decision of the Apex Court in Gujarat Ambuja Case cited supra. Surprisingly, the Appellate Authority too, had in its order noticed the period permitted as per Rule 7A ibid, and yet upheld the order in original impugned in the appeal along with interest. We have no hesitation in holding that the Appellate Authority has erred in upholding the interest vide the impugned order. The decisions in G. Paper Boards Ltd v CCE, 2007 (8) STR 53 (Tri-Chennai) and Pentokey Organy (I) Ltd v CCE, 2016 (46) STR 486 (Tri-Chennai) relied upon by the Appellant, fortifies our aforesaid opinion.
36. In light of our discussions and for the reasons stated above, we are of the considered view that while there is no infirmity in the impugned order to the extent it upholds the demand of service tax made in the Order in Original, however to the extent it upholds the interest, the impugned order is liable to be set aside. Ordered accordingly.
The appeal is partly allowed in the aforesaid terms, with consequential relief(s), in law, if any.
(Order pronounced in open court on 05.05.2026)
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