In a major relief to Raymond, the Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) while directing the refund of Service Tax to Raymond ruled that the Service tax cannot be levied under reverse charge mechanism prior to April 18, 2006.
The appellant, Raymond availed services of goods transport operator services. A show-cause notice dated 28.09.2021 was issued demanding service tax of Rs.43,89,613/- payable on Goods Transport Operator Services, along with interest and penalty. The appellants deposited an amount of Rs. 43,89,613/- vide challan dated November 07, 2003 “under protest”. A corrigendum dated 03.11.2004 was issued purporting to amend the SCN dated 28.09.2001 by inserting various amended provisions vide Finance Act, 2003 and 2004, and demanding service tax by invoking an extended period of limitation. The said corrigendum was received by the appellant on 10.11.2004.
The coram of Judicial Member, Anil Choudhary found that the issue of levy of service tax on GTO service, on the receiver of service under reverse charge mechanism was held ultra vires by the Supreme Court in the case of L. H. Sugar by judgment dated 27.07.2005. It was categorically held that the „person‟ required to file a return under Section 71A of the Act was not covered under Section 73, as it stood on the date of issuance of the show-cause notice.
“I find that it is admitted fact that the appellant has taken service tax registration and are filing the periodical returns regularly. The appellant has maintained proper books of accounts in the normal course of business. The only allegation in the show cause notice is that the appellant has not discharged the service tax liability on a „reverse charge basis‟ on Goods Transport Service, received during the period 16.11.1997 to 01.06.1998. It is further alleged in the show cause notice that service tax was imposed as transport of goods of service w.e.f. 16.11.1997 vide Notification No. 41/1997-ST dated 5.11.1997. Further, the Central Government vide Notification No. 42/1997-ST dated 5.11.1997 amended the Service Tax Rules and in Rule 2(1)(d) clause (xvii) was inserted which read as “In relation to services provided by a GTO, every person who are liable to pay the freight either himself or through his agent for transportation by road in a goods carrier,” the Tribunal observed.
The CESTAT held that the extended period of limitation cannot be invoked, as admittedly the show cause notice has been issued after the normal period of limitation. The whole proceedings and the show cause notice are ab initio void in view of the ruling of the Supreme Court.
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