TaxTMI 
TaxTMI 
2021 (8) TMI 630
X X X X Extracts X X X X
X X X X Extracts X X X X
....f Rs. 5,25 267/- on the ground that the said amount was paid after the Notification No.15/2017 and 16/2017-ST both dated 13th April, 2017 requiring appellant to pay the Service Tax which alongwith interest of Rs. 1,10,572/- on service tax, and SBC were paid on 17.10.2018 towards service tax on ocean freight for Bill of Entries filed by appellant during 23.04.2017 to 30.06.2017. These payments were eligible for Cenvat Credit. However, post GST roll out w.e.f. 01.07.2018, the appellant could not avail said Cenvat Credit as such filed for the refund in terms of section 142 (3) read with section 142 (6) (a) of CGST Act, 2017, but the Department observed that since due to the aforesaid both Notifications, the appellant had enough time for payment of service tax on ocean freight of CIF Value of the imports and to indicate the same in their ST-3 returns to be filled upto 31st August, 2017, but the appellant failed to indicate the same or to revise the same at the appropriate time that the refund was proposed to be rejected vide show cause notice No.462 dated 18.02.2017. The said rejection was confirmed vide Order-in-Original No.02/2019-20 dated 16 May, 2019 on the ground that GST Act do n....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nd appeal is prayed to be allowed. 4. While rebutting these submissions, it is submitted by learned DR that the payment of service tax has admittedly been made post rolling out of GST Act. The payment was otherwise made on appellant's own violation. This has rightly been held that eligibility for Cenvat Credit due to payment of duties on own violation is different from the eligibility for said credit in pursuance to any proceeding of appeal review or reference. Accordingly applicability of Section 142 (6) (a) of CGST Act, 2017 is denied to the present case. Eligibility about refund of KKC CESS has also been rightly denied. Submitting that there is no infirmity nor any illegality in the findings of the order of Commissioner (Appeals) that the present appeal is prayed to be dismissed. 5. After hearing both the parties and perusing the record, I am of the opinion that to adjudicate about the entitlement of the appellant for the refund of duty paid by him admittedly for the period prior GST Act, 2017 which rolled out on 1st July, 2017, but paid on 17.10.2018, the legal position first need to be understood:- 1. As far as who is liable to pay Service Tax 2. Whethe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ments vide the other Notification No. 16/2017-S.T. is also the same i.e. an importer like the Petitioner is made the person liable to pay service tax on ocean freight in case of CIF transactions, though the service of transportation of goods in CIF transactions is rendered by the ship owner/operator to the overseas seller/supplier, and not to the local importer. 5.4 Since the challenge is to the provisions empowering the Central Government to collect and recover service tax on Ocean Freight and the Petitioners have challenged such provisions only in respect of the CIF contracts, it is necessary to consider what is "ocean freight", what is "CIF", and how the CIF is different from the FOB contracts. 5.5 In the international trade, the goods are bought and sold by way of two different modes/methods, namely, the CIF contract and FOB contract. Therefore, I must give a fair idea about both these modes/methods, is necessary. 5.6 FOB (i.e. Free on Board) is a contract of sale between the foreign supplier and the local importer, where the importer would engage the vessel/ship owner or operator for importing goods into India. In the FOB contract, the service of transportation of goo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ame at the buyer's risk and entitling the seller to payment of their price......". 6. In light of this distinction Section 26 of the Sale of Goods, 1930 Act draws relevance which reads as follows : "S. 26. Risk prima facie passes with property. - Unless otherwise agreed, the goods remain at the seller's risk until the property therein is transferred to the buyer, but when the property therein is transferred to the buyer, the goods are at the buyer's risk whether delivery has been made or not : Provided that, where delivery has been delayed through the fault of either buyer or seller, the goods are at the risk of the party in fault as regards any loss which might not have occurred but for such fault : Provided also that nothing in this section shall affect the duties or liabilities of either seller or buyer as bailee of the goods of the other party." 6.1 The title of Section 26 shows that the rule provided thereunder is the prima facie rule subject to the agreement otherwise between the parties. This is clearly indicated by the expression "unless otherwise agreed" with which the section begins. The parties to the contract are, thus, free to by-pass t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sumptions about any indirect benefit to a person. 9. In Commissioner, Surat-I v. Patel Vishnubhai Kantilal & Co., 2012 (28) S.T.R. 113 (Guj.), the Hon'ble High Court has considered relevant case law on this proposition in paras 19 to 22 of this judgment and held at para 22 that the rule of construction of a charging section is that before taxing any person it must be shown that he falls within the ambit of the charging section by clear words used in the section. If a person has not been brought within the ambit of the charging section by clear words, he cannot be taxed at all. 10. When the Respondents have admitted that the importers in India are not persons receiving service of sea transportation, and that it is the Respondent's case that the Indian importers were "indirectly" receiving such service and hence were persons liable to pay service tax on such service; it is clearly a case where the Respondents propose to charge service tax from the third parties i.e. the Indian importers by implication, and not by clear words of the charging section. The impugned provisions creating a charge of service tax on third parties though the Act of the Parliament provides for levy and c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....efits. 13.1 Since the Notification under which the payment was made have as such been struck down, any payment made pursuant thereto no more remains under the scope of the charging section, i.e. it cannot be called as duty. Still retaining the said amount will therefore unjustly enrich the Department. The consequence, accordingly, is that the appellant is entitled for the refund of the said amount. 13.2 Though the stand of Department is that the refund is qua amount paid by the appellant on October' 18 i.e. after 01.07.2017, and paid as CGST amount, and the refund therefore is governed by GST law. 13.3 Be that as it may, there is some controversy regarding the "transitional ITC" to be claimed under Section 140(1) of the CGST Act, 2017 which is claimed to have some vague reference that KKC cannot be taken as transitional ITC as CGST, while filing TRAN-1. In fact, qua Section 140(1) of the said Act, while the law permitted accumulated credit of KKC to be claimed as CGST ITC by was of transitional provisions, a retrospective amendment has been made vide CGST (Amendment Act), 2018 in this regard, which is not yet operationalized till date. 13.4 That in terms of Notification....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ically enacted to provide for cash refund in case where any credit becomes due and available to an assessee after introduction of GST regime. The appellant referred to the following case law:- a) Oswal Castings P. Ltd. Reported in 2019 (24) GSTL 649 (Tri.- Chan) MCPI Private Ltd. & Another vs. Union of India & Others 14. But I am of the opinion that the issue is covered by the decision in the case of Mohit Minerals Pvt. Ltd. Vs. Union of India & 1 Other [2020 (1) TMI 974 - Gujarat High Court ] where it was held that No tax is leviable under the Integrated Goods and Service Tax Act, 2007, on the ocean freight for the services provided by a person located in a non-taxable territory by way of transportation of goods by a vessel from a place outside India upto the customs station of clearance in India and the levy and collection of tax of such ocean freight under the impugned Notifications is not permissible. 15. This Court vide judgement and order passed in the case of Mohit Minerals Pvt. Ltd. Vs. Union of India [Special Civil Application No.726 of 2018 and allied petitions] declared the Entry No.10 of the Notification No.10/2017-Integrated Tax (Rate) dated 28t....