Transport of goods by road

Transport of goods by road

CESTAT, CHENNAI BENCH

Commissioner of Central Excise, Salem

Orient Abrasives

P. G. CHACKO, JUDICIAL MEMBER

STAY ORDER NOS. 1189 AND 1190 OF 2006

FINAL ORDER NOS. 1256 AND 1257 OF 2006

APPLICATION NOS. S/50/60 OF 2006 AND S/PD/64 OF 2006

APPEAL NOS. S/175 AND 186 OF 2006

December 07, 2006

Section 65, read with section 73, of the finance Act, 1994 - Transport of goods by road service - Period 16-11-1997 to 1-6-1998 - Assessee had availed services of goods transport operators during relevant period but discharged service tax liability thereon on 13-9-2004 - However, after retrospective amendment made in Act to make GTO service beneficiaries liable to pay service tax for relevant period, department issued a show-cause notice proposing to appropriate above payment made by assessee towards service tax and to impose penalties - Original authority confirmed said proposal - Commissioner (Appeals) set aside demand and vacated penalty - In instant appeal revenue challenged order of Commissioner (Appeals) - However, in case of L.H. Sugar Factories Ltd v. CCE, [2007] 8 STT 295 (New Delhi - CESTAT) Tribunal had held that GTO service recipients were not covered by provisions of sections 70 and 73 and show-cause notices issued under section 73 to such persons were not maintainable - Whether in view of above judgment departments appeal was to be dismissed - Held, yes [Para 6]

Section 11B of the Central Excise Act, 1944 - Refund - Whether in view of facts mentioned under heading ‘Transport of goods by road service’ since no player for refund was made by assessee before Lower authorised and had made payment of tax with interest thereon voluntary and not under pretest and had never filed claim for refund thereof, amount so paid by him was not refundable in view of decision CCE v. EID Parry (India) Ltd. [2006] 5 STT 365 (Chennai - CESTAT) - Held, yes [Para 7]

FACTS

The assessee had received GTO service during 16-11-1997 to 1-6-1998 but did not paid tax on such service during that period later on, the assessee paid the tax on 13-9-2004. During the relevant period, the assessee was not liable to pay service tax on GTO service as held by the Apex Court in the case of Laghu Udyog Bhartia v. Union of India [2006] 4 STT 322, wherein the provision of the Service Tax Rules 1994, which made GTO service recipients liable to pay service tax was struck down as ultra vires section 66. Subsequently, the Act was amended by the Finance Act, 2000 (which came into force on 12-5-2000) so as to make GTO service beneficiaries liable to pay service tax with retrospective for relevant period. In view of the amended provisions of law, the department issued a show-cause notice to the assessee on 12-11-2004 proposing to appropriate the payment as also to impose penalties. On appeal, the Commissioner (Appeals) set aside the demand of service tax and vacated the penalty. In instant appeal filed by the revenue, the assessee filed cross objections praying for refund of the service tax and interest paid by it.

HELD

In the case of L.H. Sugar Factories Ltd. v. CCE, [2007] 8 STT 295 (New Delhi - CESTAT) the Tribunal had held that GTO service recipients were not covered by the provisions of sections 70 and 73 and further that show-cause notices issued under section 73 to such persons were not maintainable as those persons, though brought under section 71A, were still not covered under section 73. Contextually, it may be mentioned that section 71A was inserted in the by the Finance Act, 2003. Thus, according to the decision of the Tribunal in L.H. Sugar Factories Ltd.’s case (supra), service tax was not recoverable from the above persons under section 73 even after the amendments brought to the Act by the Finance Act, 2003. The Tribunal’s decision was affirmed by the Supreme Court in L.H. Sugar Factories Ltd.’s Case (supra). [Para 4]

In view of the settled legal position in L.H. Sugar Factories (supra) the department’s appeal was to be dismissed. [Para 6]

The prayer of the assessee regarding refund could not be acceded to for two reasons. Firstly, no such prayer was made before the lower appellate authority by the party. Secondly, the payment of tax with interest thereon was voluntary and not under protest and no claim for refund thereof was ever filed. Amounts so paid by the assessee were not refundable as held in CCE v. EID Parry India Ltd.]. [2006] 5 STT 365 (Chennai - CESTAT). In the circumstances, the assessee would not entitle for to refund. [Para 7]

CASE REVIEW :

L.H. Sugar Factories Ltd. v. CCE [2007] 8 STT 295 (New Delhi - Cestat) - Followed

CCE v. EID Parry India Ltd. [2006] 5 STT 365 (Chennai - Cestat) - Followed