Ocean freight service tax lacked statutory authority, so no levy could be fastened on the importer under reverse charge.

Service tax could not be levied on ocean freight for imported goods because the sea transport up to the Indian port was treated as an extraterritorial service beyond the taxing reach of the Finance Act, 1994. The impugned notifications and reverse charge mechanism were held to lack statutory authority to fasten the levy on the importer, following the cited High Court view and consistent Tribunal practice. No service tax was therefore payable on ocean freight, and no liability could be imposed on the importer.

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Issues: Whether service tax could be levied on ocean freight in respect of imported goods and fastened on the importer under the impugned notifications and reverse charge mechanism.

Analysis: The levy on ocean freight had already been held unconstitutional in the cited High Court decision and had been consistently followed by the Tribunal. The reasoning accepted that transportation by sea up to the Indian port is an event beyond the land mass of India, and that the charging and delegated provisions of the Finance Act, 1994 did not authorise collection of service tax on such extraterritorial services. The impugned notifications and the reverse charge arrangement were therefore treated as beyond the statutory power conferred by the Act.

Conclusion: Service tax was not payable on ocean freight, and no liability could be fastened on the importer.

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