Ocean freight service tax levy required fresh adjudication after the underlying tax charge was later held unconstitutional.

Service tax on ocean freight for transportation of imported goods to an Indian port was challenged on the basis of denial of 70% abatement under Notification No. 26/2012-Service Tax. A later judgment declaring the levy on ocean freight unconstitutional materially changed the legal foundation of the dispute, and the controversy required reconsideration in that legal setting together with the connected issues. The impugned order was set aside and the matter remanded for fresh adjudication in light of the later constitutional ruling.

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Issues: Whether the demand of service tax on ocean freight, founded on denial of 70% abatement under Notification No. 26/2012-Service Tax dated 20.06.2012, could be sustained in view of the later declaration that the levy itself was unconstitutional, and whether the matter required reconsideration by the adjudicating authority.

Analysis: The demand related to service tax on ocean freight for transportation of imported goods to an Indian port. The later judgment declaring the levy on ocean freight unconstitutional materially altered the legal basis on which the lower authorities had proceeded. Since that decision was not available when the impugned orders were passed, the controversy required fresh consideration in the changed legal position, including all connected issues.

Conclusion: The impugned order was set aside and the matter was remanded for fresh adjudication in light of the later constitutional ruling and the remaining issues.

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