Lakshmi Saraswati Textiles (Arni) Ltd. Vs Commissioner of GST & Central Excise (CESTAT Chennai)
In Lakshmi Saraswati Textiles (Arni) Ltd. Vs Commissioner of GST & Central Excise, the Customs, Excise and Service Tax Appellate Tribunal examined the validity of a service tax demand raised on freight paid to Goods Transport Operators (GTOs) for the period from 16.11.1997 to 01.06.1998. During this period, service tax was leviable on GTO services, and the liability to pay tax was placed on specified categories of persons, including companies paying freight. The department issued a show cause notice (SCN) dated 22.03.2002 under Section 73 of the Finance Act, 1994, proposing recovery of service tax, interest, and penalties for non-payment and non-filing of returns. The adjudicating authority confirmed the demand, and the appellate authority upheld it relying on judicial precedents.
The appellant challenged the demand on the ground that the SCN was issued under an incorrect statutory provision. It was argued that after retrospective amendments through the Finance Acts of 2000 and 2003, a separate mechanism was created under Section 71A for filing returns by recipients of GTO services. The appellant contended that Section 73 applied to cases of failure under Section 70, which concerned service providers, whereas recipients like the appellant were governed by Section 71A. Relying on the Supreme Court decision in L.H. Sugar Factories, it was submitted that SCNs issued under Section 73 against such recipients were procedurally invalid and not maintainable.
