R.K. Abichandani, President

Facts

This appeal is directed against the order dated 18-1-2005 passed by the Commissioner (Appeals-I) Customs and Central Excise, Indore dismissing the appeal of the present appellant which was preferred against order-in-original made by the Assistant Commissioner on 4-10-2004rejecting the refund claim of the present appellant in respect of an amount of Rs. 42,42,686 which was earlier paid by the appellant as service tax under rule 7A of the Service Tax Rules read with section 71A of the Finance Act, 1994.

2. The service tax paid by the appellant was in respect of the period from 16-11-1997 to 1-6-1998 during which the appellant had received service from goods transport operators. Value of the taxable service was Rs. 8,48,53,724.66 on which the amount of service tax payable was Rs. 42,42,686, as stated in the return of service tax in form ST-3B prescribed under rule 7A of the said rules. An amount of Rs. 1,000 was also paid on account of interest/fine/penalty payable on the said amount as mentioned in the said return filed by the appellant. The service tax was paid on 20-11-2003 on the basis of the self assessment. It was declared by the appellant that the particulars mentioned in the return were in accordance with the records and books maintained by the appellant and were correctly stated. It was also stated that the appellant had assessed and paid the service tax correctly in terms of the provisions of said Act and rules made thereunder. In the forwarding letter dated 20/24-11-2003 which is on record, it was stated by the appellant that the said amount was paid as service tax under protest, "with the right to seek refund of the same if at a later date the Apex Court holds it ultra vires and/or not payable". It was stated that the fresh returns were also filed with the requisite TR-6 challans evidencing payment of service tax on the freight amount paid during the period from 16-11-1997 to 1-6-1998. According to the appellant the service tax on the freight paid by the appellant to the goods transport operators during the period from 16-11-1997 to 1-6-1998 was not payable by the appellant. Earlier, by communication dated 10-11-2003 the appellant had informed the revenue that they were not making any payment of service tax for the relevant period and that they were not under an obligation to file a fresh return for the said period in the prescribed form ST-3B. It was stated that the amendment brought about by section 158 of the Finance Act, 2003 was intended to apply only to such cases where action was already taken earlier and which stood validated by section 117 of the Finance Act, 2000. According to the appellant the intention of the amendment made by Finance Act, 2003 was not to issue fresh show-cause notices or demands. However, thereafter the appellant, in fact, paid the service tax in the prescribed form by filing returns under section 71A read with rule 7A, as noted above.

2.1 On 19-4-2004 the appellant preferred a refund claim for the aforesaid amount stating that they were not liable to pay service tax on the freight amount paid to the goods transport operators during the said period. It was stated that the appellant was not liable to collect the service tax and file the return for the same in view of the decision of Supreme Court in Laghu Udyog Bharati v. Union of India 1999 (112) ELT 365 in which it was held that the provisions of the rules making persons other than the goods transport operators as being responsible for collecting the service tax were ultra vires the Act. It was submitted that the Parliament had amended the law retrospectively by sections 116 and 117 of the Finance Act, 2000 in order to overcome the effect of the Apex Court’s decision and thus the provisions newly introduced validated the collection of service tax made under the earlier provisions. According to the appellant since the amendments brought by Finance Act, 2000 merely justified the levy but did not make any