ORDER
P.G. Chacko, Member (J)
1. In the Revenue’s appeal, the challenge is against dropping of a demand of Service Tax on the respondents. The demand was raised in a show cause notice issued on 14-2-2003 for the month of August, 1999. The respondents in this case had received ‘Clearing and Forwarding’ services from the service-provider during the said period and the demand was raised thereon. The original authority confirmed the demand and the first appellate authority vacated the same.
2. In the other appeal, the appellants are aggrieved by a demand of Service tax for the period 16-11-1997 to 1-6-1998 for having received ‘Goods Transport’ service from the service-provider. This demand was raised in a show cause notice on 13-5-2002 and the same was confirmed by the original authority and sustained by the first appellate authority. Hence this appeal of the assessee.
3. As, in these appeals, the question to be decided upon is whether the service recipients (respondents in Appeal No. S/22/2004 and appellants in Appeal No. S/39/2004) were liable to pay Service tax during the respective periods of dispute, the appeals are taken up for disposal.
4. Heard both sides. Ld. Counsel for the assessees submits that, as the subject show cause notices were received after 12-5-2000 (the date on which the Finance Act, 2000 received Presidential assent), the demands of Service tax raised therein are hit by the Apex Court’s ruling in Laghu Udyog Bharati v. UOI [1999 (112) E.L.T. 365 (S.C.)]. Even otherwise, Counsel submits, both the demands are barred by limitation prescribed under Section 73 of the Finance Act, 1994. The SDR has reiterated the findings in the impugned orders.
5. I have carefully considered the submissions. The assessees in both the appeals are recipients of taxable services, namely ‘Clearing and Forwarding’ service, and ‘Goods Transport’ service. In respect of both these services, rules had been framed by Central Government to recover Service tax from the recipients of service. But these rules were held to be ultra vires Sections 65 and 66 of the Finance Act, 1994 by the Hon’ble Supreme Court in the case of Laghu Udyog Bharati (supra). In order to get over the Supreme Court’s ruling, Parliament amended Section 65 ibid in relation to the limited period 16-7-1997 to 16-10-1998 under Section 116 of the Finance Act, 2000, whereby recipients of ‘Goods Transport’ service and ‘Clearing and Forwarding’ service were defined as “assessees”. Further, for the aforesaid limited period, Parliament declared that “any action taken or anything done or purported to have been (i) taken or done at any time during the period commencing on and from the 16th day of July, 1997 and ending with the day, the Finance Act, 2000 receives the assent of the President shall be deemed to be valid and always to have been valid for all purposes, as validly and effectively taken or done” vide Section 117 of the Finance Act, 2000. Later on, the Finance Act, 2003, made certain amendments to the Service tax provisions of the Finance Act, 1994, whereby the aforesaid assessees were required to present Tax Returns to the proper officer within six months from 14-5-2003 (date on which the Finance Act, 2003 received Presidential assent). Ld. Counsel has also invited my attention to the legal opinion given by the Additional Legal Advisor to Government of India. This opinion is to the effect that Service tax could not be recovered from the aforementioned service-receivers for the period covered by the amendment where no action was initiated against them for such recovery during such period.
6. In the instant case, the demands of Service tax were raised beyond 12-5-2000 in show cause notices dated 13-5-2002 and 14-2-2003. Such demands are not affected by the amendments made to Section 65 by Parliament under Section 116 of the Finance Act, 2000 and consequently they are hit by the Apex Court’s ruling in Laghu Udyog Bharati (supra). Furthermore, undisputedly, the demands raised by the Department, in these cases, are far beyond the period of limitation prescribed under Section 73 of the Finance Act, 1994.
7. In the result, the Revenue’s appeal fails and the appeal of M/s. EID Parry (I) Ltd. succeeds. Appeal No. S/22/2004 is rejected and Appeal No. S/39/2004 is allowed.