TaxTMI 
TaxTMI 
2025 (8) TMI 800
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....4 to September 2015 on which service tax of Rs. 32,91,15,764 and Rs. 16,53,37,886 respectively had allegedly not been discharged. The second of the notices was merely statement of demand relying on the proposition advanced in the first that demurrage fitted one of the 'declared services' in section 66E of Finance Act, 1994 as arising from detention of vessel in port by not adhering to the timelines for loading or discharge of cargo. The order [ order-in-original no. 61-62/COMMR/(RS)/LTU-M/S.TAX/ 2016 dated 30th September 2016 ] of Commissioner of Central Excise & Service Tax (LTU), Mumbai dropped the proceedings on the finding that the impugned consideration was for activity that could not be disaggregated from 'transport of goods' which was, admittedly, exempted from taxation under Finance Act, 1994 owing to '(p) services by way of transportation of goods - (i) xxxxx (ii) by an aircraft or vessel from place outside India to the customs station of clearance in India; (iii) xxxxx' in section 66D of Finance Act, 1994 enumerating 'negative list of services' till 31st May 2016, when omitted by amending [Finance Act, 2016] law, as far as 'inward fr....
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.... in 'charter parties', it is common practice to mitigate risk thereof by stipulating 'laytime' and 'demurrage' for non-adherence thereof. 'Laytime' is the agreed upon window of time during which a vessel is expected to complete loading or discharge, as the case may be, with 'demurrage' being that chargeable from the charterer for any stay beyond the stipulated 'laytime' not attributable to the vessel operator. The 'demurrage' is disincentive to delay retention of vessel in port which has cost implication to vessel operator. It is, thus, a contractual arrangement that has everything to do with transport. 6. Moreover, the 'declared service' deployed in the show cause notice and harped upon in the grounds of appeal is a conceptual expression not amenable to easy comprehension of intent of coverage. Contextually, 'declared service' is legal fiction and, particularly, when so described is hardly clarificatory. It is well-settled law that taxing statutes are to be literally construed and that legal fiction is not to be stretched beyond intent. This is evident from the exposition on that aspect by the Hon'ble High Court of Gujarat thus '11. But it is equally well-settled and t....
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....pinning and Weaving Mills Co., and this is what they said in regard to the fiction created by the proviso to paragraph B of Part I of the First Schedule to the Finance Act, 195 : "All that the fiction does is to bring profits of back years into the immediately preceding previous years, so that the requirements of the income-tax law may be complied with. As we have already stated, this fiction cannot be carried further than what it is intended for; it cannot be used to make these profits take the place of total income, which did not exist in the previous year and to which the rate is to be applied under the terms of the proviso." 13. It would, therefore, be seen that when the court is called upon to construe the effect of a legal fiction the court must first ascertain what is the purpose for which the legal fiction is enacted and then in the field of that purpose the court must give full effect to the legal fiction by carrying it to its logical conclusion.' in Commissioner of Income-Tax, Gujarat v. Bai Vina [(1965) 0 GLR 583]. 7. The enumeration in section 66E of Finance Act, 1994 that was invoked in the show cause notice as well as in the grounds of appeal p....
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..... A contract to do something or to abstain from doing something cannot be said to have taken place unless there are two parties, one of which expressly or impliedly agrees to do or abstain from doing something and the other agrees to pay consideration to the first party for doing or abstaining from such an act. Such contractual arrangement must be an independent arrangement in its own right. There must be a necessary and sufficient nexus between the supply (i.e. agreement to do or to abstain from doing something) and the consideration. 5. The issue also came up in the CESTAT in Appeal No. ST/ 50080 of 2019 in the case of M/s Dy. GM (Finance) Bharat Heavy Electricals Ltd in which the hon'ble Tribunal relied on the judgement of divisional bench in case of M/s South Eastern Coal Fields Ltd Vs. CCE Raipur {2021(55) G.S.T.L 549(Tri-Del)}. Board has decided not to file appeal against the CESTAT order ST/A/50879/2022-CU[DB], dated 20.09.2022 in this case and also against Order A/85713/2022, dated 12-8-2022 in case of M/s Western Coalfields Ltd. Further, Board has decided not to pursue the Civil Appeals filed before the Apex Court in M/s South Eastern Coalfields Ltd. supra (CA....