Ocean freight service tax under reverse charge was quashed as ultra vires, with consequential demands set aside.

Notifications and circulars imposing service tax on ocean freight under the reverse charge mechanism were quashed as ultra vires, following a Gujarat High Court decision and a coordinate Bench ruling in an identical matter. The parties accepted that the controversy was covered by those precedents, and the pending Supreme Court proceedings did not prevent relief. As a result, the consequential service tax demands founded on the impugned notifications and circular did not survive.

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Issues: Whether the notifications and circular fastening service tax liability on ocean freight under the reverse charge mechanism were liable to be quashed.

Analysis: The impugned notifications and circular were already struck down in a detailed decision of the Gujarat High Court, and a coordinate Bench had followed that view in an identical matter. The parties accepted that the controversy was covered by those decisions, and the matter was stated to be pending before the Supreme Court.

Conclusion: The notifications and circular were quashed and set aside.

Final Conclusion: The petition succeeded and the impugned service tax demands founded on the challenged notifications and circular did not survive.

Ratio Decidendi: Delegated fiscal instructions that are covered by binding or followed precedent and are found ultra vires cannot be sustained and are liable to be struck down together with the consequential demand.

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