Court Rules Against Service Tax on Overseas Vessel Transport; Orders Refunds for Paid Taxes to Petitioners.

The HC allowed the petitions challenging the validity of Rule 10 of the Place of Provision of Service Rules, 2012, and Section 66B of the Finance Act, 1994. It declared the imposition of service tax on transportation services by vessel from outside India as ultra vires. Consequently, the court directed the respondents to refund the service tax paid by the petitioner under the invalidated notifications, reinforcing the binding nature of its judgments on subordinate authorities. The rule was made absolute, and no costs were awarded to any party.

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Issues:
Challenge to the validity of Rule 10 of the Place of Provision of Service Rules, 2012 and Section 66B of the Finance Act, 1994 regarding the levy of service tax on transportation services by vessel from outside India. Validity of TRU Circular No. 206/4/2017-ST. Refund claim based on previous court judgments.

Analysis:

1. The petitions raised common issues regarding the validity of Rule 10 of the Place of Provision of Service Rules, 2012 and Section 66B of the Finance Act, 1994. The court heard the petitions analogously and delivered a common judgment.

2. The Special Civil Application No. 17804 of 2017 was treated as the lead matter for convenience in addressing the issues raised by the petitioner.

3. The petitioner sought various reliefs, including declaring Rule 10 of the Place of Provision of Service Rules, 2012 ultra vires certain sections of the Finance Act, 1994, and challenging the imposition of service tax on transportation services by vessel from outside India.

4. The petitioner was taxed for services availed for power generation under Notification 15/2007.

5. Previous judgments by the court and the Supreme Court declared certain notifications ultra vires, impacting the levy of service tax, setting a precedent for similar cases.

6. In the case of Sai Steel Ltd. & Ors. Vs. Union of India, the court struck down specific notifications as ultra vires sections of the Finance Act, 1994, leading to the quashing of proceedings against the writ applicants.

7. The court further referenced its previous order in Special Civil Application No. 2748 of 2022, reinforcing the decision to strike down notifications and provide consequential reliefs.

8. The court addressed a refund claim by the petitioner, citing relevant legal precedents regarding the refund of taxes declared unconstitutional, directing the respondents to refund the service tax paid by the petitioner within a specified timeframe.

9. The court emphasized the binding nature of its judgments on subordinate authorities, directing the respondents to refund the service tax paid by the petitioner pursuant to the invalidated notifications.

10. Ultimately, the court allowed the petitions, directing the refund of service tax paid by the petitioner and making the rule absolute, without awarding costs to any party.

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