Delegated tax rules cannot enlarge levy powers beyond the charging provision and Article 265, making CIF contract coverage invalid.

Rule 10 was held ultra vires to the extent it applied to CIF contracts, because a delegated rule cannot extend tax liability beyond the charging provisions or the constitutional limit in Article 265. The court treated the issue as covered by the Gujarat High Court decision and noted that no stay had been granted by the Supreme Court, which supported the conclusion that the impugned rule could not operate on CIF contracts. The challenge therefore succeeded insofar as the rule sought to levy tax in that context.

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Issues: Whether Rule 10 of the impugned rules was ultra vires Article 265 of the Constitution of India read with Sections 66B and 66C of the Finance Act, 1994 insofar as it applied to CIF contracts.

Analysis: The petition was disposed of in view of the stated position that the subject matter was covered by the decision of the Gujarat High Court and there was no stay of that decision from the Supreme Court. On that basis, the challenged rule was held to be beyond the constitutional and statutory levy scheme to the extent it operated on CIF contracts.

Conclusion: The challenge succeeded, and Rule 10 was declared ultra vires to the extent it applied to CIF contracts.

Ratio Decidendi: A delegated rule cannot impose tax or extend tax liability beyond the authority conferred by the charging provisions and the constitutional limitation in Article 265.

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