AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2026 (3) TMI 399
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....5 of the Constitution of India. 2. The Petitioner has challenged Notification No. 01/2017-ST dated 12th January 2017, Notification No. 14/2017-ST, Clause 1 (Explanation V) of Notification No. 15/2017-ST and clause 2 of Notification No. 16/2017-ST dated 13th April 2017 (hereinafter collectively referred to as impugned notifications). The Petitioner has prayed for several reliefs; however, the Petitioner seeks to restrict the grievance in the present petition to prayer clause (g). For ease of reference, the prayers as sought for in the aforesaid petition are reproduced below: (a) this Hon'ble Court be pleased to issue a writ of declaration or any other appropriate writ, order or direction, declaring Section 66C(2) of the Finance Act, 1994, in as much as it empowers the Central Government to frame rules levying Service Tax on services provided by a person in a non-taxable territory to a person in a non-taxable territory, as ultra vires to the Act as well as to Article 245 of the Constitution of India; (b) this Hon'ble Court be pleased to issue a writ of declaration or any other appropriate writ, order or direction, to declare Section 68(2) of the Finance A....
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....ovided by a person located in a non-taxable territory to a person in a non-taxable territory as being ultra vires the Act as well as the Constitution of India; (g) this Hon'ble Court be pleased to issue a writ of certiorari or a writ in the nature of certiorari or any other appropriate writ, order or direction for calling for the records of the present case and after going through the legality and validity thereof be pleased to quash and set aside the Letters dated 14" February, 2018, 26" April, 2018, 25" September, 2018 and 24" December, 2018 issued by Respondent No.4 and the Show Cause Notice dated 14th May 2019 issued by Respondent No. 5; (h) this Hon'ble Court be pleased to issue a writ of mandamus or writ in the nature of mandamus or any other appropriate writ or order or direction under Article 226 of the Constitution of India ordering and directing the Respondents themselves, their officers, subordinates, servants and agents to refrain from taking any steps for collecting Service Tax / IGST from the Petitioner on the component of import ocean freight in respect of goods imported by the Petitioner on CIF basis; (i) that pending the hearing a....
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.... case of Union of India vs. M/s Mohini Minerals Pvt. Ltd. Civil Appeal No. 1390 of 2022, decided on 19.05.2022 has held that notification no 16/2017-ST dated 13th April 2017, which amended Rule 2(1)(d)(i)(EEC) of Service Tax Rules, 1994 (STR), which made the importers liable to pay service tax under Reverse Charge Mechanism (RCM) on transportation of goods in a vessel provided by a person located in a non-taxable territory to a person located in a non-taxable territory from a place outside India upto the Custom Station for clearance in India was ultra-vires of Sections 64, 65B(44), 66(b), 67, 68 and 94 of the Finance Act 1994 and hence the importers under the Cost, Insurance and Freight (CIF) Contract were not liable to pay service tax on ocean freight under the RCM. Further, it was also held that levy of IGST on such ocean freight under RCM in terms of Notification No. 10/2017-IT, the importers being liable to pay IGST on 'composite supply' comprising of supply of goods and supply of service of transportation, insurance, etc. in CIF Contract, a separate levy on them for supply of services by shipping line would be violative of Section 8 of the Central Goods and Services Tax Act, 2....
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..... By virtue of Sub Section (2) of Section 68, the Central Government has power to shift the liability to pay service tax; the method which is popularly known as reverse charge mechanism, under which service tax is collected from the recipient of service. Notification No. 30/2012-ST issued under Section 65(2) of the Finance Act is for reverse charge system; and the table under para (II) of the Notification shows that the Central Government has shifted the burden to pay service tax to the person receiving the service by virtue of Col. No. 4 of the table. Thus, the reverse charge system under Section 68(2) of the Finance Act permits the Central Government to collect or recover service tax from the receiver of service, though the primary charge is on the person providing taxable service by virtue of Sub Section (1) of Section 68. 38. But the importers in CIF contracts i.e. the writ applicants herein are neither service providers nor service receivers in respect of transportation of goods by a vessel from a place outside India upto the Customs station of clearance in India. Section 68(1) and also the reverse charge Notification under Section 68(2) permit the Central Government ....
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....his insertion of Sub Rule (7CA) in Rule 6 is also ultra vires the machinery provision of Section 67, and also rule making power of Section 94. 47. There is no power conferred upon the Central Government under Section 94 to fix value of any service, the way such power is conferred upon the Board under Section 14(2) of the Customs Act, 1962. 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 is ultra vires the Rulemaking power. Secondly, it is an option under Rule 6 (7CA) to pay service tax on the amount calculated @1.5% of CIF value of the imported goods; but if the importer does not exercise this option, then there is void because actual value of this service i.e. ocean freight is not known even to the Revenue officers. Therefore, the scheme of taxation would fail and fall in absence of a machinery provision for valuation of the service when tax is proposed to be recovered from a third party not having any information about the value of such service. 58. In view of the aforesaid discussion, the writ application succeeds and is hereby allowed. The Noti....
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....e case of SAL Steel Limited. As regards the Revenue's appeal pending before the Hon'ble Supreme Court against the aforesaid decision, I find that there is no stay against the said High Court judgment. In view of this position, I find no infirmity in the impugned order which was passed relying on the jurisdictional High Court judgment in the case of SAL Steel Limited. Accordingly, following the Hon'ble Gujarat High Court decision in the case of SAL Steel Limited, the impugned order is upheld and the Revenue's appeal is dismissed. Cross objection is also disposed of." 12. The aforesaid decision of the Tribunal was carried in Appeal by the Revenue before the Supreme Court. The Supreme Court in Commissioner of Service Tax, Ahmedabad (supra), dismissed the Civil Appeal filed by the Revenue by an Order dated 01.09.2023 passed on Civil Appeal Diary No. 2146/2023. 13. We may observe that the similar issue as fell for consideration before the Madras High Court in the case of Chennai & Ennore Ports Steamer Agents Association Vs. Union of India, in such decision the Court had considered the decision of the Division Bench of the Gujarat High Court in SAL Steel....
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.... built and borne by the foreign shipping liners nor the steamer agents who book cargo for and behalf of a shipping liner. 126. Further, in the case of contracts on a CIF (Cost, Freight and Insurance), the foreign supplier-exporter engages the services of the Overseas Shipping Liner and is responsible for arranging transportation and insurance of the goods. The consideration for shipping the goods is payable by the foreign supplier in the case of CIF contracts to the foreign/Overseas Shipping Liner. 130. We therefore, hold that service tax cannot be demanded from these petitioners as neither the "steamer agents" nor the "importers" in India are the recipient of service. They are not liable to pay tax. 149. In Kusum Ingots and Alloys Ltd. Vs. Union of India, 2004 (168) E.L.T. 3 (S.C.), it was held that an order passed on writ petition questioning the constitutionality of a Parliamentary Act whether interim or final keeping in view the provisions contained in Clause (2) of Article 226 of the Constitution of India, will have effect throughout the territory of India subject of course to the applicability of the Act. If that be so, the notices which have been c....
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....e Gujarat in SAL Steel Ltd.(supra) as also by the Division Bench of the Madras High Court in Chennai & Ennore Ports Steamer Agents Association (supra). Thus, the Petitioners' challenge to the impugned notifications as prayed for in prayer clause (a) needs to succeed on the ground that the said notifications were set aside in the case of SAL Steel Ltd.(supra). 15. In so far as the impugned notification at Exhibit-F is concerned being subject matter of prayer (c) as also partly prayer clause (a), it appears that such challenge would stand covered by the decision in Union of India Vs. Mohit Minerals Pvt. Ltd 4 in which the Supreme Court has held that the IGST and CGST define reverse charge and prescribe the entity that is to be taxed for those purposes. It was held that the specification of the recipient by Notification No. 10/2017 is only clarificatory and that the Government by notification did not specify a taxable person different from the recipient prescribed in Section 5 (3) of the IGST Act for the purposes of reverse charge. It was held that levy imposed, on the service aspect of the transaction was in violation of principles of 'composite supply' enshrined under Secti....