The constitutionality of service tax rules imposing levies on overseas transportation services is deemed ultra vires, mandating refunds of service tax.

JUDGMENT :

BHARGAV D. KARIA, J.

1. Heard learned advocate Mr.Anand Nainawati for the petitioner and learned advocate Mr.Param V. Shah for the respondent No.3.

2. Rule, returnable forthwith. Learned advocate Mr.Param Shah waives service of notice of rule for and on behalf of the respondent No.3.

3. By this petition under Article 226 of the Constitution of India, the petitioner has prayed for the following reliefs :

“(a) Issue an appropriate writ, declaring Rule 10 of the Place of Provision of Service Rules, 2012 and Rule 2(1)(d)(EEC) of the Service Tax Rules , 1994 to be unconstitutional and ultra vires the provisions of the 1994 Act;

(b) Issue an appropriate writ, striking down Section 66B of the Finance Act, 1994 read with Rule 10 of the Provision of Service Rules, 2012 in so far as it imposes the levy of service tax on the services by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India, where the service provider and the service recipient is located outside India;

(c) Issue an appropriate writ, declaring Rule 8B of the Point of Taxation Rules, 1994 to be unconstitutional and ultra vires the 1994 Act;

(d) Issue a writ of mandamus or a writ in the nature of mandamus, or any other appropriate writ, order or direction, under Article 226 of the Constitution of India declaring paras 4 & 4.1 of the TRU Circular No.206/4/2017-ST dated 13.04.2017 to be contrary to law;

(e) Issue a writ of mandamus or a writ in the nature of mandamus, or any other appropriate writ, order or direction, under Article 226 of the Constitution of India, restraining to the Respondents from levying service tax on the services by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India;

(f) Issue any other writ, order or direction as this Hon'ble Court may deem just and fair and circumstances of the case;

(g) For such further and other reliefs as the nature and circumstances of the case may require.”

4.1. The brief facts of the case are that the petitioner was subjected to pay service tax for the services availed on ocean freight as per the Notification No.15/2017.

4.2. This Court by judgment and order dated 23^rd January, 2020 in case of Mohit Minerals Pvt. Ltd. Versus Union of India and Others (Special Civil Application No.726 of 2018) held the Notification No.8/2017-Integrated Tax (Rate) dated 28.06.2017 and the Entry No.10 of the Notification No.10/2017-Integrated Tax of the same date as ultra vires the provisions of the Integrated Goods and Services Tax Act, 2017 (for short ‘the IGST Act’) on the ground that both the Notification and the Entry lack legislative competency. The decision of this Court is also upheld by the Hon’ble Supreme Court.

4.3. In the case of M/s.Sal Steel Ltd. & Anr. Versus Union of India & Ors. reported in 2019 SCC Online Guj 3706, this Court passed the following order :

“58. In view of the aforesaid discussion, the writ application succeeds and is hereby allowed. The Notification Nos.15/2017-ST and 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 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.”

4.4. In the decision in case of Torrent Power Ltd. Versus Union of India & Anr. (Special Civil Application No.2748 of 2022) rendered on 25^th April, 2022 following the decision in case of M/s.Sal Steel L