2023-TIOL-559-HC-MAD-ST
Chennai And Ennore Ports Steamer Agents Association Vs UoI
ST - Writ Petitions have been filed by and on behalf of Steamer Agents - These petitioners have challenged the vires of Notification No.28/12-ST dated 20.6.2012, Notification Nos.1/2017-ST, 02/2017-ST& 03/2017-ST, all dated 12.01.2017 and Section 66C(2) of Chapter V of the Finance Act, 1994 as ultra vires the provision of the Constitution - They have also challenged the clarification of the Board in Para 4 & 4.1 of the Circular No.206/4/2017 - Service Tax , dated 13.04.2017 - Another set of petitions have been filed by Importers and who have challenged the vires of Notification Nos.30/2012-ST dated 20.06.2012, Notification No.03/2017-ST, dated 12.01.2017, Notification Nos.14/2017-ST, 15/2017-ST & 16/2017-ST, all dated 13.04.2017 - Some of them have also challenged show cause notices issued to them while some of them have called upon the respondent to refund the service tax paid by them.
Held:
+ Parliament was steadfast in taxing service provided from outside India and consumed in India. Thus, the Parliament introduced new provisions to Chapter V of the Finance Act, 1994 vide Finance Act, 2012. [para 54]
+ Neither Section 66C of the Finance Act, 1994 nor the Place of Provision of Services Rules, 2012 issued by the Central Government under Section 66C(1) read with Section 94(2)( hhh ) of the Finance Act, 1994 with effect from 01.07.2012 vide Notification No.28/2012-ST dated 20.06.2012 can be challenged. They are generic provisions. They are attracted and come into play once an activity satisfies the definition of "service" in Section 65B(44) of the Finance Act,1994 and exemption given is withdrawn. [para 59]
+ Sub Clause (ii) to Clause (p) to Section 66D of the Finance Act, 1994 as in force with effect from 01.07.2012 which placed "service by way of transportation of goods by an aircraft or a vessel from a place outside India" to the Customs Station for clearance in India under the negative list was omitted from the "negative list" with effect from 01.06.2016 by Section 149(b)(ii) of the Finance Act, 2016. [para 65]
+ Thus, the aforesaid service of transportation of goods through an aircraft or a vessel from a place outside India up to the Customs Station of clearance in India ceased to be excluded from the negative list and would have become liable to service tax under Section 66B of the Finance Act, 1994. In these writ petitions, we are not concerned with amendment to Section 66D of the Finance Act, 1994 vide Section 149 (b)(ii) of the Finance Act, 2016. [para 66]
+ Exemption to services received from a provider of service located in a non-taxable territory by a person located in a non-taxable territory, by way of transportation of goods in a vessel from a place outside India up to the customs station of clearance in India ceased to be exempted in view of the impugned Notification No.1/2017-ST dated 12.01.2017 with effect from 22.01.2017. [para 72]
+ Therefore, services by way of transportation of goods by a vessel from a place outside India up to the Customs Station of clearance in India which was exempted from 1.7.2012 became liable to pay service tax under Section 66B of the Finance Act, 1994, in view of the above amendment. [para 73]
+ At best, the petitioners can be said to be aggrieved by the withdrawal exemption in Sl.No.34(c) of Mega Exemption Notification No.25/2012-ST dated 20.06.2012 vide the impugned Notification No.1/2017-ST dated 12.01.2017 with effect from 22.01.2017. However, the law on the subject is well settled against the petitioner. [ Kasinka Trading = 2002-TIOL-583-SC-CUS has clarified the position. The power to grant exemption implies power to withdraw the exemption.] [para 75, 76]
+ Therefore, challenge to notification No.1/2017-ST dated 12.01.2017 w.e.f 22.01.2017 in W.P.No.2149 of 2017 also has to fail. [para 78]
+ Service tax would have been payable right from inception i.e. from 1.7.2012 either on the Steamer Agents or on the importer, as the case may be, but for the concession given by the Parliament under the negative list in Section 66D and by the Central Government vide Sl.No.34(c) to Mega Exemption Notification 25/2012-ST dated 20.06.2012. [para 79]
+ It cannot be said that the Place of Provision of Services Rules, 2012 issued vide Notification No.28/2012-ST dated 20.12.2012 was invalid, merely because exemption that was earlier granted vide Sl.No.34(c) to Mega Exemption Notification 25/2012 ST dated 20.06.2012 was withdrawn vide Notification No.1/2017-S.T., dated 12.01.2017. [para 80]
+ As long as there is a territorial nexus between the service being taxed and its consumption in India whether directly or indirectly, the challenge to Section 66C(2) of the Finance Act, 1994 cannot be countenanced. Consequently, challenge to provisions of the Place of Provision of Services Rules, 2012 has to fail. [para 85]
+ We, therefore, hold that the challenge to the vires to Section 66C(2) of the Finance Act, 1994 has to fail. Therefore, W.P No.2147 of 2017 is liable to be dismissed. For the same reason, challenge to Notification No.28/2012-ST dated 20.6.2012 vide W.P No.2147 of 2018 has also to fail. [para 90]
+ Thus, with effect from 01.07.2012, services provided in connection with the transportation of goods by a service provider located outside the territory of India to a person located in a " non-taxable territory" were exempted under Sl.No.34(c) of Mega Exemption Notification No.25/2012-ST, dated 20.06.2012. [para 91]
+ Thus, service tax initially became payable by "steamer agents" on ocean freight with effect from 22.01.2017 in view of the amendment by Notification No.1/2017-ST dated 12.01.2017. Later, by the impugned Notification No.15/2017-ST dated 13.04.2017, the burden was shifted on the “importer”. [para 112]
+ There is a flaw in the above Notification No.03/2017-ST dated 12.01.2017 and Notification No.15/2017-ST dated 13.04.2017. It is the foreign liner who engages the service of various other persons in the course of transport of service. It is the foreign shipping liner who receives service who can be taxed and not the importers or the steamer agents although by virtue of the above two notifications, the person liable to pay tax has been also declared as the person who complies with Sections 29, 30 or 38 read with Section 148 of the Customs Act, 1962 with respect to such goods between 22.01.2017 and 22.04.2017 and, thereafter, the importer as defined under Clause (26) of Section 2 of the Customs Act, 1962 of such goods between 23.04.2017 and 30.06.2017. [para 139]
+ The demands are incapable of being enforced in view of the above defects pointed out in the amendment to Notification No.30/2012-ST dated 20.06.2012 issued under Section 68(2) of the Finance Act, 1994 vide the impugned Notification No.3/2017, dated 12.01.2017 under the scheme of the Act, the Rules made thereunder and the Notifications issued. [para 140]
+ Thus, neither of the Category of writ petitioners are liable to pay tax in view of defect in Notification No.3/2017-ST dated 12.01.2017 w.e.f. 22.01.2017 and Notification No.15/2017, dated 13.04.2017. [para 144]
+ For the period under the GST regime with effect from 01.07.2017, the Hon'ble Supreme Court has answered the issue against the revenue in Mohit Minerals, = 2022-TIOL-49-SC-GST-LB . [para 148]
+ Impugned Circular No. 206/4/2017-ST dated 12.4.2017 was issued in the background of withdrawal of exemption for services provided by a person located in a 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 vide impugned Notification No. 1/2017-S.T., dated 12.1.2017 with effect from 22.1.2017. [para 152]
+ There are defects in the notifications as mentioned above. They are curable defects. However, it is unwarranted, as the drift under the GST regime is also to not burden the import with IGST under similar circumstances. Therefore challenges to Notifications in Table No.1 and Table No.4 fail and demand of service tax on these petitioners also fail. [para 159]
+ As far as refunds are concerned in Table No.6, the petitioners will have to file appropriate refund applications for refund of the amounts which are said to have been paid by them in accordance with the law laid down by the Hon'ble Supreme Court in Mafatlal Industries Private Limited = 2002-TIOL-54-SC-CX-CB . [para 160]
Conclusions: [para 164]
i . The challenges to Section 66C(2) of the Finance Act, 1994, impugned Circular No.206/4/2017 - Service Tax, dated 13.04.2017 and impugned Notifications issued by the Central Government under the provisions of the Finance Act, 1994 fail. Therefore, Writ Petitions in Table, 1,2,3 4 are liable to be dismissed and are accordingly dismissed.
ii. These petitioners are, however, not the recipient of service for the purpose of the impugned Notification No.3/2017-ST dated 12.01.2017 amending Notification No.30/2012-ST dated 20.06.2012 issued under Section 68(2) of the Finance Act,1994.
iii. Therefore, there is no scope for demanding service tax from these petitioners in view of the defects pointed out in the impugned Notification No.3/2017-ST dated 12.01.2017 amending Notification No.30/2012-ST dated 20.06.2012 issued under Section 68(2) of the Finance Act,1994. Therefore, there is no justification in the impugned Show Cause Notices in Table-5. These show cause notices are, therefore, quashed.
iv. The respondents shall also not issue any show cause notices to the importers and steamer agents for the period covered by this order i.e . for the period between 22.01.2017 and 30.06.2017 for similar activity.
v. As far as refunds in Table 6 are concerned, the petitioners are directed to file refund claims within 30 days from the date of receipt of a copy of this order, if no claim has already been made.
vi. All the refund claims shall be disposed of within a period of 60 days or 90 days, as the case may be, in accordance with the law laid down by the Hon'ble Supreme Court in Mafatlal Industries Private Limited = 2002-TIOL-54-SC-CX-CB.
- Petitions disposed of: MADRAS HIGH COURT
2023-TIOL-558-HC-RAJ-GST
Medicamen Biotech Ltd Vs UoI
GST - Rule 89 - Refund application made under the category "supply made to SEZ unit/Developer with payment of Tax" - Pursuant to review proceedings, c laim of refund and the order passed by the Adjudicating Authority allowing the refund has been held to be not legal and correct mainly on the basis that scanned copies of declarations and undertakings were uploaded as attachments with Form GST RFD-01 submitted electronically through common portal, but the taxpayer/writ petitioner had failed to physically sign those declarations and undertakings before scanning and attaching with Form GST RFD-01 - Since Tribunal is not in existence, the petitioner is before the High Court - Petitioner submits that even though there is no requirement of the rule that declarations and undertakings should be separately signed in physical mode also before uploading and submitting through electronic mode, by administrative instructions, such a requirement has been introduced and not only that, the same has been made basis to reject the claim of the petitioner - Counsel for Revenue submitted that vide Circular No. 125/44/2019-GST dated 18.11.2019 it has been clearly provided that the declarations appended with the refund application are required to be physically signed before they are scanned and uploaded through electronic mode on the portal. Held: A reading of the provisions of Rule 89 of the CGST Rules of 2017 would show that there is no specific requirement that the declaration must necessarily be signed in physical mode - Method of authentication is covered by the provisions contained in Rule 26 of the CGST Rules of 2017 - A conjoint reading of the provisions contained in Rule 26 and Rule 89 of the CGST Rules of 2017 leaves no manner of doubt that as far as requirement of law is concerned, it does not mandate that even after having authenticated a document in the manner prescribed under Rule 26 of the CGST Rules of 2017, insofar as declarations (as sought in the present case) are concerned, they are also required to be signed in physical mode before being scanned and uploaded through electronic submission along with the application for refund - If declarations, as in the present case, are digitally authenticated in the manner prescribed under Rule 26 of the CGST Rules of 2017, non-submission of physically signed and scanned declarations may only be an irregularity, but not an illegality - Impugned order passed by the Appellate Authority upsetting the order of refund passed by the Adjudicating Authority is not sustainable in law - Administrative instructions [Circular No. 125/44/2019-GST dated 18.11.2019] cannot bar claim of refund if the legal requirements as contained in law are fulfilled - Writ petition is allowed: High Court [para 11, 12, 13, 14, 15]
- Petition allowed: RAJASTHAN HIGH COURT
2023-TIOL-557-HC-ALL-GST
Rising India Vs CCT
GST - Petitioner has sought for quashing the notice dated 14.02.2023 issued u/s 65(3) of the UPGST Act, 2017 by the Dy. Commissioner (Tax Audit), State Tax, Jhansi - Submission of the petitioner is that they having been already subjected to the proceedings of adjudication u/s 74 of the U.P.G.S.T Act, 2017, the revenue authorities are precluded from exercising jurisdiction u/s 65 of the Act, that too by way of necessary implication - Counsel for Revenue submits that the proceedings u/s 74 had arisen from fact discrepancies noted, which resulted in the order dated 5.7.2022 against which appeal has also been dismissed on ground of delay; that at present, only audit has been directed and no adverse conclusion has been drawn, therefore, no legal injury has been caused to the petitioner as may require invocation of Article 226 for seeking relief. Held: Upon perusing the records, there is no material shown to exist that any earlier audit had been permitted or directed under Section 65 of the Act and a plain reading of the provisions do not suggest any bar in exercise of that power, if the assessee had faced any earlier proceedings under Section 74 of the Act with respect to Input Tax Credit, excess claimed, there is no inherent legal infirmity shown to exist in the audit having been directed, keeping in mind the language of the statute - No good ground is made out to offer any interference in exercise of extraordinary jurisdiction under article 226 - Petition is disposed of: High Court
- Petition disposed of: ALLAHABAD HIGH COURT
2023-TIOL-556-HC-DEL-GST
Bansal Steels Vs CCGST
GST - The petitioner filed the present petition seeking that directions be issued to the Department to rectify the order of cancellation of GST registration of the petitioner - The petitioner had applied for cancellation of its GST registration for the first time on 04.12.2018 with effect from that date, stating that the reason for seeking such cancellation was that it had discontinued/closed its business - The application was rejected by an order dated 11.02.2019 on the ground that the Central Tax Liability entered was incorrect - The petitioner states that it filed the 'Nil' GST return for the period after 04.12.2018 till the January 2019, to comply with the provisions of law as its application seeking cancellation of its GST registration with effect of 04.12.0218, was rejected - The petitioner also immediately filed a second application for cancellation of the registration on 11.02.2019 requesting that the registration be cancelled from 01.02.2018 - This was an apparent error as the petitioner had continued to file its returns till January 2019 - According to the petitioner, it had, by an inadvertent error, entered 01.02.2018 as the date from which cancellation of registration was sought, instead of 01.02.2019. Held - There is no merit in the Revenue's contention that there are any grounds to doubt the petitioner's statement that its request for cancellation of GST Registration with effect from 01.02.2018 was an apparent error - It is apparent that the petitioner had meant to seek cancellation of the registration with effect from 01.02.2019 and had filed returns till January 2019 - Nevertheless, considering the Revenue's apprehension, the order warrants being set aside with directions to the Revenue to re-consider the petitioner's application by considering the date from which the registration was requested to be cancelled as 01.02.2019 instead of 01.02.2018 - The application be processed in 2 weeks' time: HC
- Writ petition disposed of: DELHI HIGH COURT
2023-TIOL-76-AAR-GST
Leap Ecotec Solutions Pvt Ltd
GST - Applicant had sought certain clarification by filing an application for Advance Ruling - However, after attending a personal hearing on 20.03.2023, the applicant addressed a mail dated 05.04.2023 informing that they intended to withdraw their application of Advance Ruling.
Held : After considering the request, the application filed is allowed to be withdrawn since now it is infructuous: AAR
- Application disposed of: AAR |
