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2025 (3) TMI 347 - HC - CustomsDuty leviable under Section 3 (7) of the CTA is independent of the impost created by Section 5 of the IGST or not - supply of service conferred that character by virtue of Schedule II of the CGST would remain unimpeded by the concept of import of goods as ordinarily understood or not - Levy of additional duty of customs over and above the IGST - HELD THAT - An integrated tax on the import of services can only be imposed under Section 5 (1) of the IGST. A supply of service once so classified cannot be recharacterized. The Constitution Amending Act read along with the provisions contained in the CGST and the IGST leave in no doubt that an import of service could have only been taxed by virtue of a legislation referrable to Articles 246A and 269A. If the submission of the respondents were to be accepted it would compel to view Entry 83 falling in List I as the conferment of an authority to legislate and levy a duty on import of service which is clearly not the legislative field or subject of that entry. In fact if Entry 83 were so read it would impinge upon the power conferred by Articles 246A and 269A itself. A conjoint reading of the Proviso to Section 5 (1) along side Section 3 (7) of the CTA clearly establishes that they are a part of a composite and comprehensive machinery laid in place for collection of a goods and services tax. It merely designates the place and the juncture when the tax liability would be liable to be discharged. The integrated tax which is spoken of in Section 3 (7) can only be recognised as being a reference to the integrated tax leviable under the IGST. We find ourselves unable to countenance a power or authority inhering in the respondents to subject a supply or import of service to a tax under the CTA in the garb of levying an additional duty. The reliance placed on the judgment of the Supreme Court in Hyderabad Industries 1999 (5) TMI 29 - SUPREME COURT is clearly misplaced since the said decision was primarily concerned with the interplay between BCD and an additional duty of customs under the CTA. While there cannot be a cavil of doubt with respect to those two levies being separate and distinct we are in the present batch concerned with the levy of a tax upon import of services under the IGST and an additional levy which according to the respondents would be leviable on a purported reading of Section 3 (7) of the CTA. Regard must also be had to the amendments which came to be made in Section 3 (7) and which no longer speaks of an authority to levy a tax notwithstanding the provisions contained in any other enactment but restricts its expanse to the imposition and collection of a tax as leviable under Section 5 (1). In any case and as we have found both Sections 5 (1) of the IGST and Section 3 (7) of the CTA are indelibly connected to the levy and collection of the tax contemplated under the former. Section 3 (7) cannot be construed/interpreted as envisaging an independent levy. The impugned amendments ushered in by virtue of Notification No. 36/2021 together with the clarification issued by the CBIC were clearly intended to expand the tax net and cannot therefore be termed to be merely clarificatory. The original notifications were in unambiguous terms restricted to the levy of a BCD. It was this position which was sought to be drastically amended by those changes. In any event the levy of an additional duty even after the transaction has been subjected to the imposition of a tax treating it to be a supply of service would be clearly unconstitutional and cannot be sustained. Conclusion - An integrated tax on the import of services can only be imposed under Section 5(1) of the IGST. A supply of service once so classified cannot be recharacterized. Notification No. 36/2021 quashed to the extent it purports to levy an additional duty over and above the IGST imposed under Section 5(1). Petition allowed.
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