ORDER
K.K. Usha, President
1. These appeals are directed against the common order passed by the Commissioner (Appeals) Customs & Central Excise, Meerut-II dated 22.5.2003. The Commissioner (Appeals) had dismissed the appeal filed by the assessee. Adjudicating authority had confirmed demand of service tax from the appellant on the ground that they had availed services of goods transport operators for transportation of raw material, packing materials. Capital goods and finished goods etc. during 16.11.97 to 1.6.98 and had not paid service tax @5% as required under chapter V of the Finance Act, 1994 as amended subsequently.
2. It is admitted that all the appellants in the course of their business had utilized services of goods transport operators. As per provisions of Finance Act, 1944 and the rules made thereunder service provider was to collect and pay service tax. Service tax was liable to be paid on the services rendered by Clearing and Forwarding Agent and Goods Transport Operator with effect from 16.7.97 and 16.11.97 respectively. As per Service Tax Rules, 1994 every person who paid or was liable to pay for clearing and forwarding service either himself or through his agent was liable to pay service tax. So also every person who paid or was liable to pay freight or transportation charges either himself or through his agent for transportation of goods by road in a goods carriage was liable to pay service tax in respect of goods transport operators. In Laghu Udyog Bharti Vs. Union of India (1999) 6 SCC 418 = 1998 (112) ELT 265 Hon’ble Supreme Court of India held that the provisions of Rule 2(d) (xii) and 2(d) (xvii) is so far as it made persons other than clearing and forwarding agents or person other than goods transport operators responsible for collecting service tax is ultra-vires the Finance Act, 1994.
3. Finance Act 2000 made amendments to the relevant provisions with retrospective effect. Amendment sought to validate levy and collection of service tax for the period between 16.7.97 to 12.5.2000 in respect of services of goods transport operators an clearing and forwarding agents. The amendment also sought to deny refund of service tax to users and also for recovery of refund already granted consequent to the judgment of the Supreme Court in Laghu Muddying Bart. Provisions of Section 115 of the Finance Act 2000 was made retrospective from 16.7.97. Thus, Service Tax became payable on services rendered by clearing and forwarding agent with effect from 16.7.97 but in the case of service tax with respect to goods transport operators it became payable only from 16.11.97 in view of Notification No. 41/97 ST dated 5.11.97. Subsequently by Notification No. 49/98 dated 2.6.98 which came into effect from 2.6.98 services of goods transport operators have been exempted from levy of service tax. Therefore, the liability for service tax in respect of goods transport operators is sought to be kept alive by the above amendment for the period 16.11.97 to 1.6.98.
4. Show cause notices were issued to the appellant on different dates in 2002 demanding service tax tax from them for the services received from goods transport operators. Show cause notice proposed to invoke extended period of limitation and there was also a proposal for imposition of penalty and demand of interest. In is the case of the appellants that no show cause notice could have been issued to them under Section 73 even after the amendment brought under Finance Act 2000.
5. As on the date of issue of the show cause notice Section 73 of the Finance act stood as follows :
Section 73 (a) the Assistant Commissioner of Central Excise or, as the case may be, the Deputy Commissioner of Central Excise has reason to believe that by reason of omission or failure on the parts of the assessee to make a return under section 70 for the prescribed period or to disclose wholly or truly all material facts required fro verification of the assessment under section 71, the value of taxable service for the quarter has escaped assessment or has been under assesseed, or any sum has erroneously been refunded, or
(b) notwithstanding that there has been no omission or failure as mentioned in clause (a) on the part of the assessee, the Assistant Commissioner of Central excise or, as the case may be, Deputy Commissioner of Central Excise has, in consequence of information in his possession, reason to believe that the value of any taxable service assessable in any prescribed period has escaped assessment or has been under-assessed, or any sum has erroneously been refunded, he may, in cases falling under clause (a), at any time within five years, and in cases falling under clause (b), at any time within six months from the date of filing the return, serve on the assessee as notice and proceed to assess or reassess the value of the taxable services.
6. As far as service receiver like the appellants are concerned there was no date for fling return. this is clear from the decision of the Supreme Court in Laghu udyog Bharti. In paragraph 12 of the above judgment it was observed as follows :
“these sections clearly show 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. Surely, this is a type of information which cannot, under any circumstances, be supplied by the customer, Moreover the operative part of sub-section (1) of Section 70 clearly stipulates that it is a person responsible for collecting the service tax who is to furnish the return. By rules which are framed, the person who is receiving the services cannot be made responsible for filing the return and paying the tax. Such a position is certainly not contemplated by the Act.”
7. In view of the above, the appellants 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. But the appeals cannot be closed on the above basis in view of subsequent amendment brought under the Finance Act 2003 with retrospective affect. These provisions will have effect for the period from 16.7.97 to 16.10.98 Following are the relevant amendments. Section 69 as amended read as follows: –
“Section 68 (1) Every person providing taxable service to any person shall pay service tax at the rate specified in Section 66 in such manner and within such period as may be prescribed.
Provided that –
(i) in relation to services provided by a clearing and forwarding agent. every person who engages a clearing and forwarding agent and by whom remuneration or commission (by whatever name called) is paid for such services to the said agent for the period commencing on and rom the 16th day of July, 1997 and ending with the 16th day of October, 1998; or
(ii) in relation to services provided by goods transport operators, 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 to be person liable to pay service tax, for such service provided to him, to the credit of the Central Government.”
8. In view of the above provision, the appellant are deemed to be persons liable to pay service tax and shall pay service tax @ specified in Section 66. Recently inserted Section 71 A reads as follows :
“Section 71A. Notwithstanding anything contained in the provisions of Sections 69 and 70, the provisions therefore 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 according.”
Section 73 has also undergone certain amendments by Finance Act 2003. After the amendment Section 73 reads as follows :
(1) If –
(a) The Assistant Commissioner of Central Excise or, the case may be, the Deputy Commissioner of central Excise has reason to believe that by reason of omission or failure on the part of the assessee, to make a return under section 70 for any prescribed period or to disclose wholly or truly all material facts required for verification of the assessment under section 71, the value of taxable service has escaped assessment or has been under assessed, or service tax has not been paid or has been short paid or any sum has erroneously been refunded, or
(b) Notwithstanding that there has been no omission or failure as mentioned in clause (a) on the part of the assessee, the Assistant Commissioner of Central Excise or, as the case may be, Deputy Commissioner of Central Excise has, in consequence of information in his possession, reason to believe that he value of any taxable service assessable in any prescribed period has escaped assessment or has been under-assessed, or service tax has not been paid or has been short paid or any sum had erroneously been refunded.
He may, in cases falling under clause (a), at any time within five years, and in cases falling under clause (b), at any time within one year, from the relevant date, serve notice on the person chargeable with the service tax which has escaped assessment or has been under assessed or has not been paid or has been short paid, or to whom any sum has been erroneously refunded, requiring him to show cause why he should not pay the amount specified in the notice.
73(3) For the purpose of this section, “relevant date” means, –
(i) in the case of taxable service in respect of which service tax has escaped assessment or has been under-assessed or has not been paid or has been short paid-
a) where under the rules made under this Chapter, a periodical return, showing particular of service tax paid during the period to which the said return relates, is to be filed by an assessee, the date on which such return is so filed ;
b) where no periodical return as aforesaid is filed, the last date on which such return is to be filed under the said rules;
c) in any other case, the date of which the service tax is to be paid under this Chapter or the rules made thereunder,
(ii) in a case where the service tax is provisionally assessed under this Chapter or the rules made thereunder, the date of adjustment of the service tax after the final assessment thereof.
(iii) in a case where any sum, relating to service tax has erroneously been refunded the date of such refund.
The above would show that even the amended Section 73 takes in only the case of assesses who are liable to file return under section 70. Admittedly, the liability to file return is cast on the appellants 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 appellants invoking section 73 are not maintainable.
9. We therefore come to the conclusion that the show cause notices issued to the appellants are not sustainable both under the provisions of Section 73 as it stood on the date of issue of show cause notice and also under the provisions as amended by Finance Act 2003. In the result, we set aside the order impugned and allow the appeals.