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Customs, Excise & Service Tax Appellate Tribunal

West Zonal Bench at Ahmedabad

REGIONAL BENCH-COURT NO. 2

Service Tax Appeal No. 10712 of 2020-DB

(ST/CROSS/10105/2021)

(Arising out of OIA-VAD-EXCUS-02-APP-031-2020-21 Dated 22/06/2020 passed by

Commissioner ( Appeals ), CGST & Central Excise, VADODARA)

Commissioner of C.E. & S.T.-VADODARA-II ........Appellant

1ST FLOOR... ROOM NO.101,

NEW CENTRAL EXCISE BUILDING,

VADODARA, GUJARAT-390023

VERSUS

NETAFIM IRRIGATION INDIA PVT LTD ........Respondent

268-270, 271B, GIDC MANJUSAR, TAL: SAVLI

VADODARA, GUJARAT

APPEARANCE:

Shri M P Solanki, Assistant Commissioner (AR)appeared for the Appellant

Shri Jigar Shah, Advocate with Shri Amber Kumrawat, Advocate appeared for the

Respondent

CORAM:

HON’BLE MEMBER (JUDICIAL), DR. AJAYA KRISHNA VISHVESHA

HON’BLE MEMBER (TECHNICAL), MR. SATENDRA VIKRAM SINGH

Final Order No. 10055/2026

DATE OF HEARING: 29.09.2025

DATE OF DECISION: 29.01.2026

SATENDRA VIKRAM SINGH

1. M/s. Netafim Irrigation India Pvt. Ltd., Vadodara (Appellant) are

engaged in manufacturing and sale of Drip Irrigation Systems and import

drippers, polyethylene resin and master batches. They availed the facility of

various shipping agencies and incurred expenses on ocean freight which as

per Notification No.15/2017-ST dated 13.04.2017 was leviable to service tax

under reverse charge basis w.e.f. 23.04.2017. The department initiated

investigation against the appellant by calling for the copies of the Bills of entry

and also recorded the statements of Shri Deepak Shahdadpuri, DGM Finance

on 09.04.2019. After conducting investigation, the department issued a show

cause notice dated 11.10.2019 demanding service tax of Rs.84,31,277/-

(including Swachh Bharat Cess (SBC) and Krishi Kalyan Cess (KKC)) under

proviso to Section 73(1) of the Finance Act, 1994 read with Section 74(1) of

2 ST/CROSS/10105/2021 In ST/10712/2020-DB

CGST Act, 2017 along with interest under Section 75 and penalty under

Section 78 of the Finance Act, 1994.

1.1 The show cause notice was adjudicated by the Additional Commissioner,

Central GST and Central Excise, Vadodara(II) vide impugned order dated

14.01.2020, wherein, he confirmed the above demand of service tax along

with interest. He also imposed equal penalty on the appellant. Aggrieved with

the above order, the appellant filed appeal before Commissioner (Appeal) who

vide impugned order dated 22.06.2020, allowed appeal of the party and set

aside the demand confirmed by the lower authority. Aggrieved with the above

order, the department filed the present appeal before this Tribunal.

2. In their appeal, the department took the following grounds:-

• The Commissioner (Appeal) has allowed appeal of the party on the

ground of decision of Hon’ble Gujarat High Court in the case of SAL

Steel Limited Vs. UOI reported at 2020-TIOL-163-HC-AHM-ST. Hon’ble

Court has failed to appreciate that the activity of transportation of

goods has been carried out by a vessel from a place outside India upto

Customs Station in India and service is partially provided in India.

Further, Section 66B of the 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.

• In the case of All India Federation of Tax Practitioners Vs. Union of India

reported at [2007] 9 VST 126 (SC), it was held 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 the present case,

the service is finally consumed at Indian Port.

3 ST/CROSS/10105/2021 In ST/10712/2020-DB

• Hon’ble Gujarat High Court has clearly erred in ignoring the relevant

provisions of the Finance Act, 1994 which are crucial for levy of service

tax on impugned service. Section 66C(2) states that sub section 1 of

Section 66C shall not be invalid