2021 (9) TMI 618 - HC - Service Tax

Levy of Service Tax on the services by way of transportation of goods by a vessel from a place outside India upto the customs station for clearance in India - POPOS Rules - Validity of N/N. 22/2014-ST dated 16 th September, 2014 - Vires of Article 14 of the Constitution of India and Rule 3 of the Service Tax Rules, 1994 or not - HELD THAT - Issue notice. Learned counsel for the respondents accept notice. They pray for and are permitted to file their counter-affidavits within two weeks. Rejoinder-affidavits, if any, be filed before the next date of hearing. List on 30 th September, 2021.

Summary

Issues:
Challenge to Notification No. 22/2014-ST dated 16th September, 2014
Validity of proceedings initiated pursuant to show cause cum demand notice dated 29th December, 2020
Jurisdiction of the proper officer to issue the notice under Section 73 of the Finance Act, 1994
Levy of Service Tax on the consideration received for sale of goods (electricity)
Reopening of assessment by a different Central Excise officer

Analysis:
The petitioner filed a writ petition challenging Notification No. 22/2014-ST dated 16th September, 2014, issued by Respondent No.3/Central Board of Indirect Taxes and Customs, alleging it to be violative of Article 14 of the Constitution of India and certain tax rules. The petitioner also contested the proceedings initiated based on a show cause cum demand notice dated 29th December, 2020, claiming it to be ultra vires Articles 246 and 265 of the Constitution of India, contrary to specific circulars and rules. The petitioner specifically challenged the imposition of Service Tax on services related to the transportation of goods by vessel from outside India to a customs station in India, where both the service provider and recipient are located outside India.

The petitioner's counsel argued that the show cause notice lacked jurisdiction as it was issued by an unauthorized officer under Section 73 of the Finance Act, 1994. Furthermore, the petitioner contended that the demand for Service Tax on the sale of goods (electricity) in the form of capacity charges and late payment surcharge was improper, citing the categorization of electricity as goods by the Supreme Court. The counsel highlighted that a previous order had dropped the demand for Service Tax on capacity charges, and reopening the assessment by a different officer was deemed illegal based on a Supreme Court judgment.

In response to the arguments raised by the petitioner, the court issued notice to the respondents. The respondents were given the opportunity to file their counter-affidavits within two weeks, with the provision for the petitioner to file rejoinder-affidavits before the next hearing date. The case was listed for further proceedings on 30th September, 2021, along with another connected writ petition. Additionally, respondent no.2 was directed to postpone a scheduled hearing to a date after the next court appearance.