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TMI Blog2024 (8) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... he facts of the case are that the appellant is engaged in manufacturing of Soya Lecithin. On the basis of the audit for the period F.Y. 2015-16 to F.Y. 2017-18 (upto June, 2017), it was observed that the appellant had imported goods through transportation by a vessel from a place outside India upto the customs station of clearance in India. The case of the Department is that during the period 23.04.2017 to 30.06.2017, the appellant had imported material valued at Rs.1,25,66,009/- but had not charged the service tax liability of Rs.1,88,490/-, which they were liable to pay under the RCM on transportation of goods by a vessel from a place outside India upto the customs station of clearance in India. Show cause notice dated 08.09.2020 was issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no power conferred upon the Central Government for charging and collecting the tax on extra territorial events for the services rendered and consumed beyond the "taxable territory" i.e. beyond India, the Court held that since the Act is not applicable to the territories other than India, therefore, the Executives cannot have any power to make rules for territories beyond India. After considering the various notifications, which were under challenge, imposing the liability of service tax on the importer, in the light of the statutory provisions of the Finance Act and the decisions interpreting the leviability of the service tax, the High Court laid down that the person receiving the services of sea transportation in CIF Contracts is the sel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "service" and Section 68, and also Section 94 of the Finance Act." 8.1 Further, the issue that there was no machinery provision was considered and the Court observed as under:- "44. Even if it is assumed that service tax can be recovered from a third party like the Indian importers in CIF contracts, there is no machinery provision for valuation of the service, and therefore also the impugned Rules and Notifications are unenforceable. It is an admitted position of fact that the Petitioners do not have any information about the actual amount of ocean freight paid by the overseas sellers/suppliers to shipping lines. The invoices and purchase orders (Annexure-"D" to SCA No. 20785/2018) clearly show that the price of the goods was fixed on b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enue officers. Therefore, the scheme of taxation would fall 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. 48. Therefore, Rule 6(7CA) amended by the Central Government is also ultra vires Section 67 and Section 94 of the Finance Act." 8.2 Accordingly, 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., was struck down as ultra vires Sections 64, 66B, 67 and 94 of the Finance Act, 1994; and consequently the proceedings initiated by way of show cause notice and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid decision, which was binding on them. In fact, the contention of the appellant on the basis of the decision of the High Court of Gujarat that they have not paid the Ocean Freight to the shipping company as they are neither the service provider nor the service receiver was rejected by the Asstt. Commissioner issuing show cause notice on the ground that it did not seem tenable in the light of the Rule 2(1)(d)(EEC) of Service Tax Rules, 1994. Repeatedly, not only the Tribunal and the High Court but also the Apex Court have been emphasizing that the lower authorities cannot ignore the decision of the higher forums rather they are bound by such decisions. The authorities below have acted in complete disregard of the principle of judicial prop ..... X X X X Extracts X X X X X X X X Extracts X X X X
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