TaxTMI 
TaxTMI 
2023 (9) TMI 182
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....osition of penalty. The amounts so deposited towards his tax liability in respect of ocean freight, as was pointed out by the audit, remained a deposit only. The said deposits by the appellant never attained the character of tax and the retention of the same by the department was without any authority of law. I further final that the Hon'ble Gujarat High Court in the case of Civil Appeal No.20785 of the 2018 in the case of M/s Sal Steel Ltd. vs. Union of India have struck down the levy of service tax on ocean freight from the importers by declaring the relevant provisions of the service tax Act/Rules/Notification as Ultra-vires. I further find that subsequent to the application dated 15.10.2018, for the refund of the amounts paid by the appellant he was issued a show cause notice dated 04.12.2018 proposing rejection of refund and further alleging that the appellant was liable for recovery of the Cenvat credit availed by him in terms of Rule 9(1) (b) of the CCR, 2004, whereas the refund claim was rejected under Rule 9 (1) (bb) ibid. I find that the above show cause notice was misconceived as recovery of the Cenvat alleged to have been wrongly taken cannot be decided in the matter ....
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....owing grounds:- a. There is no power conferred upon the Central Government under Section 94 of the Finance Act for charging and collecting tax on extraterritorial events. b. An essential legislative function of taxing an activity in non- taxable territory could not have been delegated to the Central Government. c. The rule making power of section 94 also does not permit the Central Government to make rules for recovering service tax from a third party who is neither the service provider nor the Service receiver. d. There is no power conferred upon the Central Government, under Section 94 to fix value of any service. In absence of any power vested in the Central Government to fix value of any service by way of making a rule or a notification, Rule 6(7CA) of the Service Tax Rules, 1994 is ultra vires of the rule making power under Section 94 of Finance Act, 1994. The Hon'ble High Court of Gujarat in this matter has held that "service provided or agreed to be provided by a person located in non-taxable territory to a person located in non-taxable territory by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance ....
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....clearly erred in ignoring these relevant provisions under the Finance Act, 1994, which are crucial for levy of Service tax on impugned services. Thus, levy of Service Tax on" service provided or agreed to be provided by a person located in non- taxable territory to a person located in non-taxable territory by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance India" is valid and proper and is consistent with provisions under Section 66B and Section 66C of the Finance Act, 1994 read with Rule 10 of the Place of Provision of Services Rule, 2012. Further, Hon'ble High Court of Gujarat in the impugned order has held that that the Parliament does not possess any jurisdiction to make Rules or Notification for taxing extra territorial activity as per Section' 94 of Finance Act, 1994 (Power to Make Rules). In this regard, it is submitted that the Hon'ble Supreme Court in GVK Industries Limited vs. Income-tax Officer, 2017(48) STR 177(SC) examined the various contours and variables regarding extra-territorial legislature power of the Parliament under Article 245 of the Constitution of India to conclude that "the Parl....
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....vs. Income-tax Officer, 2017(48) STR 177(SC). The Hon'ble High Court of Gujarat in the subject order also held that Notification No.15/2017-Service tax and Notification No.16/2017-Service tax making Rule 2(1)(d)(EEC) suffers the vices of excessive delegation and therefore held that as ultra vires of the provisions of Finance Act, 1994. In this regard the Hon 'ble Supreme Court in the matter of Supreme Court Employees Welfare Association v. Union of India {1989 (4) SCC 187} held that while deciding the validity of a subordinate legislation, scheme of the enabling Act, and also the area over which power has been delegated under the Act have to be considered and then it is to be decided whether the subordinate legislation conforms to the parent statute. Where the contention is that the inconsistency or non- conformity of the rule is not with reference to any specific provision of the enabling Act, but with the object and scheme of the parent Act, the court should proceed with caution before declaring invalidity. In View of this it is clear that Notification No.15/2017-ST and Notification No.16/2017 are within the scope and purview of the rule making power and provisions ....
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....erritory" Also, Section 68(2) of Finance Act, 1994 provides the collection of service tax from such any person as prescribed and such person could be a person other than the service provider and service receiver. Relevant provision of Section 68(2) of the Finance Act, 1994 is as under "Notwithstanding anything respect of such taxable services as may be notified by the contained in sub-section (1), in Central Government in the Official Gazette, the service tax thereon shall be paid by such person and in such manner as may be prescribed at the rate specified in section [66B] and all the provisions of this Chapter shall apply to such person as if he is the person liable for paying the service tax in relation to such service." In terms of the powers conferred under Section 68(2) of Finance Act, 1994 Central Government vide Notification No.16/2017-ST" dated 13.04.2017 amendment has been carried out in rule 2 of Service Tax Rules, 1994, whereby the person liable to service tax, other than the Service provider has been identified as the importer of goods, as defined under clause (26) of section 2 of the Customs Act, 1962. The relevant provision of notification read as under:- ....
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....ower vested in Central Government to fix value of any service by way of making a rule or a notification, Rule 6(7CA) of the service Tax Rules inserted vide Notification No.16/2017- Service Tax is ultra vires the Rule making power under Section 94 of Finance Act, 1994. In this regard, the provision under sub-section (iii) of section 67 (1) clearly prescribes that "value of services in case where the provision of service is for a consideration which is not ascertainable be the amount as may be determined in the prescribed manner". Thus, the Finance Act, 1994 does confer the power to Central Government for determination of value of service. It is further submitted that the said sub- Rule (7CA) of rule of Service Tax Rules, 1994 has been inserted vide Notification No.16/2017-ST dated 13.04.2017 in exercise of the powers Notification No.16/2017-ST dated 13.04.2017 in exercise of the powers conferred by sub-section (1), read with sub- section (2) of section, 94 of the Finance Act, 1994 and are to be read with section 67(1)(iii) of Finance Act, 1994. Therefore, the sub- rule 6(7CA) is consistent with the power conferred upon the Central Government by the Parliament under Finance Act, 1....
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....ty has erred by not taking into consideration the aforementioned facts of the case while allowing the appeal of the Respondent. In view of the above facts and circumstances, the Hon'ble CESTAT, Allahabad may be pleased to set aside the said Order-in- Appeal or may pass such order as deemed fit." 3.1 Counsel for respondent was present in the court on 08.08.2023 when matter was adjourned for 17.08.2023. While adjourning the matter both the sides were directed to attend the hearing on 17.08.2023 without any further adjournment in the matter. 3.2 Shri Santosh Kumar learned Authorized Representative appearing for the Revenue is present whereas the learned counsel for the respondent Shri M. B. Mathur has chosen not to appear despite the adjournment being made in his presence. No request for adjournment has also been placed on record. 3.3 Accordingly the matter is taken up for consideration after hearing the learned Authorized Representative who reiterates the ground taken in the memo of appeal. 4.1 I have considered the impugned order along with submissions made in the appeal and during the course of argument. 4.2 Commissioner (Appeals) has by the impugned order while allowing t....
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....se charge Notification No. 30/2012-S.T. is struck down as ultra vires Sections 64, 66B, 67 and 94 of the Finance Act, 1994; and consequently the proceedings initiated against the writ applicants by way of show cause notice and enquiries for collecting service tax from them as importers on sea transportation service in CIF contracts are hereby quashed and set aside with all consequential reliefs and benefits." Following this decision Commissioner (Appeals) has allowed the appeal filed by the appellant. 4.4 From the facts as noted in para 4.2 neither the SLP filed by the revenue has been admitted nor any stay has been granted by the Hon'ble Apex Court against the said order of the Gujarat High Court. That being so the appeal filed by the Revenue contesting the order of Hon'ble Gujarat High Court before this tribunal is devoid of any merits. It is settled law that if certain provisions of law or any notification issued under the statute is held ultra vires by any High Court in the country the same is valid law in the jurisdiction of all the High Courts of the country, unless and until jurisdictional High Court or some other High Court gives a contrary view. In case of Shipping Corpo....