P. Karthikeyan, Member (T)

1. In this application the appellants M/s. Srinivas Fine Arts Ltd., Sivakasi, has sought waiver of pre-deposit and stay of recovery of an amount of Rs. 1,71,601/- being Service Tax demanded from them in the impugned order. The facts of the case are that the appellants had availed the "Goods Transport Operators Service" during the period 16/11/97 to 01/06/98 and had not paid the Service Tax due. A Show Cause Notice was issued invoking Sections 65, 68 and 73 of the Finance Act 1994 and Rule 6 of the Service Tax Rules 1994 by the jurisdictional Superintendent of Central Excise, Sivakasi to the appellants, on the ground that they fell under the categories of persons specified under the Service Tax Notification No. 43/97 dated 5/11/97 as liable to pay tax on Goods Transport Operators service. Adjudicating the notice dated 06/02/01 vide 010 No. 128/04 (ST) dated 02/07/04, the original authority dropped the proceedings on the ground that Service Tax Notification No. 49/98 ST dated 02/06/98 exempted the appellants from paying tax on the subject service. In the impugned order passed in revision in terms of Section 84(5) of the Finance Act 1984, the Commissioner has found that the appellants were liable to pay the demand proposed in the show cause notice and accordingly, confirmed the demand under Section 73 read with 71A of the Finance Act 1994.

2. After hearing both sides, it was decided to take up the appeal itself for final disposal. The Ld. Counsel representing the appellants submits that the appellants fall in the category of persons liable to pay. Service Tax as regards GTO service in terms of Notification No. 43/97 ST dated 05/11/97, as they have a factory registered under the Factories Act 1948 though they are a Sales Tax assessee with a turn over in excess of Rs. 50 lakhs, and a company as found by the Commissioner in the impugned order. He submits that the demand confirmed under Section 73 read with Section 71A of the Finance Act 1994, is not sustainable in law in view of the judgement of the Supreme Court in CCE, Meerut-III v. L.H. Sugar Factories Ltd. reported in 2005 (187) ELT 5 (SC). He further submits that the show cause notice had not invoked Section 71A and the Commissioner had confirmed the demand under Section 71A without such a proposal in the show cause notice. The Ld. Consultant also points out that the Commissioner had relied on a stay order passed by a Single Member of the Tribunal and that the said decision did not lay down a ratio which has to be followed.

3. Ld. SDR fairly concedes that the departmental authorities are bound by the ratio of the judgment of the Apex Court.

4. I have carefully considered the case records and the arguments by both the sides. As rightly pointed out by the Ld. Counsel for the appellants, the Commissioner has confirmed the demand citing Section 71A which had not been invoked in the show cause notice proposing the demand. Therefore, demand is not sustainable. The impugned order has been passed relying on a decision of the Tribunal in the case of Bhima S.S.K. Ltd. v. CCE, Pune-III . In that case it was held that recovery of Service Tax from availer of GTO service had been authorized by the Finance Act 2003 and the tax was recoverable from such a person and it was immaterial if the provisions of Section 73 did not apply. The Tribunal also had held that the recovery was sustainable only through Section 71A. The Commissioner observed that on a harmonious reading of the provisions of Section 68, Section 71, Section 71A and Section 73, a demand under Section 73 could be raised against the person covered by Section 71A also. He also derived support from the fact that a Civil Appeal in a similar matter in the case of CCE, Chennai-II v. M/s. Sundaram Fasteners Ltd., stood admitted by the Supreme Court.

5. The assessee being a manufacturer owning a registered factory is one of the persons notified as liable to pay Service Tax on GTO service as per the Notification No. 43/97 (ST). It is seen that the Tribunal decision.in the Bhima S.S.K. Ltd. v. CCE, Pune-III (supra) relied on by the Commissioner had been passed by a Single Member of the Tribunal in a stay application. In the case of CCE, Meerut-II v. L.H. Sugar Factories Ltd. (supra), the Apex Court passed an order agreeing with the following conclusion recorded in the order of the Tribunal impugned before the Supreme Court.

The above would show that ever, the amended Section 73 takes in only the case of assessces 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 involving Section 73 are not maintainable.

In view of the binding ratio of the above judgment of the Apex Court, the impugned order cannot be sustained. Accordingly, the stay application is dismissed and the appeal is allowed.

(Dictated and pronounce in open Court)