Principal Commissioner, Central Goods & Services Tax, Meerut Vs Neeru Enterprises (CESTAT Allahabad)
CESTAT Allahabad dismissed the Revenue’s appeal in Excise Appeal No.70435 of 2020 concerning service tax deposited by Neeru Enterprises on ocean freight. The Commissioner (Appeals) had held that amounts deposited during audit towards service tax, interest and penalty on ocean freight remained deposits without authority of law because no show cause notice had been issued for demand of tax or imposition of penalty.
The Commissioner (Appeals) also relied upon the Gujarat High Court decision in Sal Steel Ltd. v. Union of India, which had struck down the relevant provisions imposing service tax on ocean freight from importers, and held that the refund could not be rejected by travelling beyond the scope of the show cause notice.
The Revenue challenged the order, contending that transportation by vessel from outside India up to the Indian customs station had a sufficient nexus with India, that the place of provision under Rule 10 of the Place of Provision of Services Rules, 2012 was India, and that the Finance Act, 1994 empowered the Government to prescribe the person liable to pay service tax and the valuation mechanism. The Revenue relied, among other authorities, on GVK Industries Ltd., Glyph International Ltd., Gujarat Ambuja Cements, Supreme Court Employees Welfare Association, Subhash Photographics and Avinder Singh. The Tribunal noted that the Commissioner (Appeals) had followed the Gujarat High Court’s decision in Sal Steel Ltd. [2020 (37) G.S.T.L. 3 (Guj.)].
The Revenue had stated that an SLP had been filed against that decision, but the Supreme Court had only issued notice and neither the SLP had been admitted nor any stay had been granted against the Gujarat High Court judgment. The Tribunal reproduced the Gujarat High Court’s conclusion that Notifications Nos. 15/2017-S.T. and 16/2017-S.T., the relevant amendments to the Service Tax Rules and Explanation V to Notification No. 30/2012-S.T. were ultra vires Sections 64, 66B, 67 and 94 of the Finance Act, 1994.
The Tribunal further noted that the Revenue could not point out any contrary order of the jurisdictional or another High Court supporting its position. Relying on the position stated in Shipping Corporation of India Ltd. [1987 (29) E.L.T. 182 (Tribunal)], the Tribunal held that the Gujarat High Court decision was binding in the circumstances.
It concluded that the Commissioner (Appeals), having followed the Gujarat High Court ruling, could not be faulted. The Revenue’s appeal was therefore dismissed as devoid of merits and the stay application was disposed of as not maintainable.
Cases Discussed
- Sal Steel Ltd. Vs. Union of India [2020 (37) G.S.T.L. 3 (Guj.)]
- Shipping Corporation Of India Ltd. [1987 (29) E.L.T. 182 (Tribunal)]
- GVK Industries Limited Vs. Income-tax Officer, 2017 (48) S.T.R. 177 (S.C.)
- Glyph International Ltd. Vs. Union of India, 2012 (25) S.T.R. 209 (Allahabad High Court)
- Supreme Court Employees Welfare Association Vs. Union of India, 1989 (4) SCC 187
- Subhash Photographics Vs. Union of India, 1993 (66) E.L.T. 3 (S.C.)
- Avinder Singh Vs. State of Punjab, (1979) 1 SCC 137
- Indian Association of Tour Operators, 2017 (5) G.S.T.L. 4 (Delhi High Court)
- Gujarat Ambuja Cements Vs. Union of India, 2005 (182) E.L.T. 33 (S.C.)
- All India Federation of Tax Practitioners Vs. Union of India, [2007] 9 VST 126 (S.C.); [2007] 7 SCC 527
- Prabhat Cotton and Silk Mills Ltd., 1982 (1) E.L.T. 203 (Guj.)
- Lucas TVS, Madras, 1987 (28) E.L.T. 266 (Mad.)
- Union of India Vs. Apart Pvt. Ltd., 199 (112) E.L.T. 3 (S.C.)
FULL TEXT OF THE CESTAT ALLAHABAD ORDER
This appeal filed by the revenue is directed against the order in appeal No.MRT/EXCUS/000/APPL-MRT/04/2020-21 dated 06.05.2020 of Commissioner (Appeal) Central Goods and Service Tax Meerut. By the impugned order following has been held:-
“5. I have carefully gone through the facts and records of the case as well as the submissions made by the appellant. I find that the appellant had deposited the amounts during audit, at the instance of the department, which also included the service tax on the ocean freight along with interest and penalty. The appellant was not issued any show cause notice for the demand of tax or imposition 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 of a refund claim as was before the adjudicating authority. Therefore, not only the adjudicating authority has travelled beyond the scope of the show cause notice but the show cause notice proposing any such recovery was itself not sustainable. Besides, the adjudicating authority has rejected the refund claim of the appellant in violation of the instruction contained in the Board’s Circular No.1053/2017-CX. Dated 10.03.2017 as he did not decide the matter judiciously but was guided and influenced by the communication from the Assistant Commissioner (Audit). I, therefore, hold that the appellant is entitled to the refund of the entire amount deposited by in Excise Appeal No.70435 of 2020 him against ocean freight in the name of service tax, interest, and penalty, which as discussed above remained a deposit with the department without the authority of law, along with the interest from the date of deposit. The adjudicating authority was in serious error in denying the refund to the appellant on unsustainable grounds as mentioned above.
6. In view of above discussion and findings the impugned order No 01/DC/ST/MBD/19-R dated 14.06.2019 is set aside, and appeal bearing No 165-ST/APPL- MRT/MRT/2019 dated 19.08.2019 filed by M/s Neeru Enterprises (EOU-Unit-II), Salim Manzil, Civil Lines Rampur, UP is allowed with consequential relief.” 2.0 Revenue has filed this appeal stating as follows in the ground of appeals:-
“2. In this case, substantive question of law is involved, as the appellate authority has allowed appeal filed by the respondent in the light of judgment dated 06.09.2019 of Hon’ble High Court of Gujarat (in Civil Appeal No.20785 of 2018) filed by M/S SAL Steel Limited and Others Versus Union of India. Hon’ble High Court of Gujarat has struck down Notification No.15/2017-ST and Notification No.16/2017-ST making Rule 2(1) (d)(EEC) and Rule 6(7CA) of the Service Tax Rules and inserting Explanation- V to reverse charge notification No.30/2012-ST as ultra vires of Section 64, 66B, 67 and 94 of Finance Act, 1994.
3. The Hon’ble High Court of Gujarat has allowed the writ petition in this matter and held Notification No.15/2017-ST and Notification No.16/2017-ST making Rule 2(1) (d)(EEC) and Rule 6(7CA) of the Service Tax Rules and inserting Explanation-V to reverse charge Notification No.30/2012-ST as ultra vires as per Section 64, 66B, 67 and 94 of Finance Act, 1994 on the following 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 in India (Ocean Freight)” is’ in’ nature of an extra territorial event and provisions of Finance Act, -1994, which is an Act of the Parliament for levy of Service Tax, do not permit nor empower the Central Government to collect Service Tax on such extra territorial events.
The Hon’ble High Court of Gujarat has failed to appreciate the fact that the activity of transportation of goods has been carried out by a vessel from a place outside India up to Customs Station, which is in India and service is partially provided in India. Further, Section 66B of Finance Act, 1994 empowers the Central Government to collect Service Tax even if the place of provision of service in terms of Place of Provision of Services Rules, 2012 is in taxable territory even in cases where the service is partially performed in India. Further, in case of All India Federation of Tax Practitioners v. Union of India [2007] 9 VST 126 (SC); [2007] 7 SCC 527, the Supreme Court has declared that service tax is a destination based consumption tax and thus the relevance of the place where the services are rendered or consumed assumes critical importance for sustaining the levy of service tax. In this case of transportation of goods by a vessel from a place outside India upto Indian Port i.e. land mass of the country, the service is finally consumed at Indian Port.
Further, as an extension for collection of service tax on the services mandated in Section 66B, sub section (1) of Section 66C of the Finance Act, 1994 gives power to Central Government to frame Rules to determine the Place of Provision of Services. As per the power conferred under Section 66C(1) Place of Provision of Services Rules, 2012 has been framed and Rule 10 of Place of Provision Rules, 2012 states that “The place of provision of services of transportation of goods, other than by way of mail or courier, shall be the place of destination of the goods.” In the present case, place of destination of the goods is India and the activity culminates in India, therefore the place of provision of such service is in India i.e. taxable territory. Further, Sub-section (2) of Section 66C clearly states that Sub-section (1) of Section 66C shall not be invalid merely on the ground that both service provider and service receiver are located at a place being outside the taxable territory. The Hon’ble High Court of Gujarat has 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 Parliament may nonetheless exercise its legislative powers With’ respectto extra-territorial aspects or causes, only when such extra territorial aspects or causes have, or are expected to have, some impact on, or effect in, or consequences for: (a) the territory of India, or any part of India; or (b) the interests of, welfare of wellbeing of, or security of inhabitants of India, and Indians.
” Further, in case of Glyph International Ltd. Vs Union of India, the High Court of Allahabad, 2012 (25) S.T.R. 209 held that the Parliament is empowered to make laws with respect to aspects or causes That occurs, arise or exist or may expected to do so within territory of India, and also with respect to extra-territorial aspects or causes that have an impact on or nexus with India. In this case, the import of goods is destined to India and therefore the service by way of transportation of goods by a vessel is also finally consumed in India. Also, as per Rule 10 of Place of Provision Rules, 2012 “The place of provision of services of transportation of goods, other than by way of mail or courier, shall be the place of destination of the goods read with Section 66C(1) of the Finance Act, 1994, the place of provision of this service is India i.e. taxable territory and therefore, there is a clear nexus of the extra- territorial aspect of the service with the territory of India.
It is further submitted that Serial No.34 (c) of Notification No.25/2012-ST dated 20.06.2012 exempts services received from the provider of service located in a non-taxable territory by a person located in a non- taxable territory. This resulted in an anomaly between Indian and, foreign service providers providing transportation of goods into India by vessels (Shipping Lines) leading to Indian service providers (who, being in taxable territory were paying service tax) losing business to foreign service providers who were located in non-taxable territory and were out of tax net. The levy of Service Tax on the service of inward transportation of goods has been brought into force to provide a level playing field playing field to domestic shipping line vis-a-vis foreign shipping lines. Therefore, to protect the interest of Indian shipping lines this levy of service tax brings into effect and it is in consonance with the principal laid down by Hon’ble Supreme Court in Excise Appeal No.70435 of 2020 in GVK Industries Limited 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 of the above mentioned notification are conforming to the provisions of the statue under which it is framed. The Hon’ble Supreme Court in case of Subhash Photographics V. Union of India 1993 (66) E.L.T. 3 (SC) held that the Courts should not question the wisdom of Government’s policy and interfere with delegated legislation. The decision in the case Avinder Singh vs. State of Punjab (1979) 1SCC 137 is also relevant. The Hon’ble High Court of Gujarat has made the reference of decision in the matter of Indian Association of Tour Operators 2017 (5) G.S.T.L. 4 (Del.), pronounced by the Hon’ble High Court of Delhi. It is submitted that Union of India in the case of Indian Association of Tour Operators has filed a Special Leave Petition (Civil) Diary No.14690 of 2018 against the Judgment in the Hon’ble Supreme Court. Therefore, this case is still pending before the Hon’ble Supreme Court and yet to attain the finality.
The Hon’ble High Court of Gujarat in this judgment held that the Indian importer can’t be brought into the ambit of charging section i.e. Section 66B of Finance Act, 1994 and therefore the levy of Service Tax for “services 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 in India” can’t be levied. In this regard, charging Section of Finance Act, 1994 is Section 66B which reads as under “There shall be levied a tax (hereinafter referred to as the service tax) at the rate of fourteen percent on the value of all services; other than those services specified in the negative list, provided or agreed to be provided in the taxable territory by one person to another and collected in such manner as may be prescribed.” Section 66B of Finance Act, 1994 clearly states that levy of service tax is consequential to any services being provided in taxable territory and not to whether the person providing the service or the person receiving the service exists in the taxable territory or not. This view is reinforced again in Section 66C(2) that “any rule made under sub-section (1) shall not be invalid merely on the ground that either the service provider or the service receiver or both are located’ at a place being outside the taxable territory” 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:- “in relation to services 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 in India, the importer as defined under clause (26) of section 2 of the Customs Act, 1962 (52 of 1962) of such goods,” [Rule 2(EEC) of Service tax Rules, 1994]” By way of the above amendment the onus to pay service tax has been shifted to the importer of goods. This has been done in exercise of powers given under section 68(2) of the Finance Act, 1994. Thus, the Hon’ble High Court of Gujarat has erred in holding that the impugned provisions creating a charge of service tax on third parties, though the Act of the Parliament provides for levy and collection of tax either from, the person providing service or, from the person receiving service, are beyond the charging provision and also beyond the Rule making power of Section 94 of the Finance Act, 1994.
Hon’ble Supreme Court, in the case of Gujarat Ambuja Cements Vs. UOI 2005 (182) E.L.T. 33 (SC) held that – “the point at which the collection of the tax is to be made is a question of legislative convenience and part of the’ machinery for realization and recovery of the tax. Subject to the legislative competence of the Taxing Authority a duty can be imposed finds to be convenient and the most effective, whatever stages it at the stage which the authority may be. The Central Government is therefore legally competent to evolve suitable machinery for collection of the service tax subject to the maintenance of a rational connection between the tax and the person on whom it is imposed. It is outside the judicial ken to determine whether the Parliament should have specified a common mode for recovery of the tax as a convenient administrative measure in respect of al particular class. That is ultimately a question of policy, which must be left to legislative wisdom.” Hon’ble High Court of Gujarat held that there exists no machinery provision for valuation of the service, and therefore, the impugned Rules and Notification No.16-2017/-Service Tax are unenforceable. Hon’ble High Court of Gujarat further held that there is no power conferred upon the Central Government under Section 94 to fix value of any service, and in absence of any power 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, 1994. The Hon’ble High Court of Gujarat in this decision held that actual value of service in case of services, 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 in India, is not known to the petitioner or the Revenue Officer. 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. In this regard, it is submitted that actual value of service provided being “not known” does not mean that value of service does not exist and such value is very much available in the contract between seller/supplier and the shipping line. It is always possible for the petitioner to obtain the information about this value and pay the service tax as prescribed. It is only as an option that if the petitioner does not want to obtain such information, then the alternate method of valuation has been prescribed as per Rule 6(7CA) of Service Tax, Rules, 1994 which has to be read with Section 67(1)(iii) of the Finance Act, 1994. In the case of Gujarat Ambuja Cements vs. UOI 2005 (182) E.L.T. 33 (SC) Supreme Court has stated that Legislative competence is to be determined with reference to the object of the levy and not with reference to its incidence or machinery and that there is a distinction between the object of tax, the incidence of tax and the machinery for the collection of the tax. Therefore, the Hon’ble High Court of Gujarat has clearly erred in the subject judgement that no machinery provision for impugned service exist and therefore Rule 6(7CA) of the Service Tax Rules, 1994 is ultra vires the Rule making power. The Hon’ble High Court of Gujarat in impugned judgment has also referred the certain case laws i.e. Prabhat Cotton and Silk Mills Ltd., 1982 (1) E.L.T. 203 (Guj.), Lucas TVS, Madras 1987 (28) E.L.T. 266 (Mad.) by the Madras High Court, UOI vs. Apart Pvt. Ltd. 199 (112) E.L.T. 3 (SC) by the Supreme Court of India, which relate to interpretation of provisions of Customs Act, 1962 and hence, are not applicable in the facts and circumstances of the present case. Accordingly, the Appellate authority 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 the appeal of the assessee relied on the decision of Hon’ble High Court of Gujarat in case Sal Steel Ltd. [2020 (37) G.S.T.L. 3 (Guj]. From the grounds as stated in appeal filed it appears that revenue has filed this appeal by challenging the order of Hon’ble High Court before this tribunal, it is not even stated in the order that the said order of Hon’ble High Court is distinguishable. Learned Authorized Representative during the course of argument stated that revenue has filed SLP against this order of Hon’ble High Court on which notice has been issued. Following is the report appearing in GSTL at [2021 (51) G.S.T.L. J14 (S.C.)].
“The Supreme Court Bench comprising Hon’ble Mr. Justice A.M. Khanwilkar, Hon’ble Mr. Justice B.R. Gavai and Hon’ble Mr. Justice Krishna Murai on 18-1-2021 after condoning the delay issued notice in Special Leave Petition (Civil) Diary No(s). 27016 of 2020 filed by Union of India (Respondent being Asahi Songwon Colors Ltd.) against the Judgment and Order dated 6- 9-2019 of Gujarat High Court in R/Special Civil Application No. 3123 of 2019 as reported in 2020 (37) G.S.T.L. 3 (Guj.) (SAL Steel Ltd. v. Union of India). While issuing notice, the Supreme Court passed the following order:
“Issue notice on the application for condonation of delay as well as on the Special Leave Petition.
Tag with Diary No. 27027/2020.”
The Gujarat High Court in its impugned order had struck down Notification Nos. 15/2017-S.T. and 16/2017-S.T. inserting Explanation V to reverse charge Notification No. 30/2012-S.T. and making Rules 2(1) (d)(EEC) & 6(7CA) of Service Tax Rules, 1994 and declared same as ultra vires the provisions of Sections 64, 66B, 67 and 94 of the Finance Act, 1994. By way of aforesaid amendments, the importer in CIF contracts who was neither service provider nor service receiver, was made liable to pay Service Tax on transportation of goods by vessel upto Indian Customs Station, transportation service being provided by shipping line to overseas supplier of goods who had paid ocean freight to said shipping line.”
4.3 Hon’ble Gujarat High Court in the said case has concluded as follows:
“58. In view of the aforesaid discussion, the writ application succeeds and is hereby allowed. The Notification Nos. 15/2017- S.T. and 16/2017-S.T. making Rule 2(1) (d)(EEC) and Rule 6(7CA) of the Service Tax Rules and inserting Explanation-V to reverse 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 Corporation Of India Ltd [1987 (29) E.L.T. 182 (Tribunal)] tribunal by majority decision has held as follows:
“……The material facts of the present case are, therefore, similar to those decided in Calcutta and Madras High Court judgments supra. The learned representative of the Department admits that there is no contrary judgment of any other High Court or of the Supreme Court on the point. In the circumstances, in keeping with the practice of this Tribunal, I hold that the ratio of the Calcutta and Madras High Court judgments supra is binding on me….
4.5 On specific query as to whether there is any contrary order of any High Court or jurisdictional High Court in the matter which may support the case of the Revenue learned Authorized Representative was not able to point out the same.
4.6 It is settled law that law as declared by the Hon’ble Gujarat High Court is law of land as on date today. The order of Commissioner (Appeal) which follows the said decision cannot be faulted with.
5.1 Appeal being devoid of any merits is dismissed.
5.2 As appeal filed by the revenue is dismissed, stay application is disposed of as not maintainable.
(Dictated and pronounced in open court)
