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2024 (7) TMI 315 - HC - Service TaxConstitutional validity of N/N. 15/2017 Service Tax dated 13.4.2017 and N/N. 16/2017 Service Tax dated 13.4.2017 - lack of legislative competency - HELD THAT - This Court, in case of MESSRS SAL STEEL LTD. 1 OTHER (S) VERSUS UNION OF INDIA 2019 (9) TMI 1315 - GUJARAT HIGH COURT where it was held that ' The Notification Nos. 15/2017-ST and 16/2017-ST making Rule 2 (1) (d) (EEC) 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 inquiries for collecting service tax from them as importers on sea transportation service in CIF contracts are hereby quashed and set aside.' The judgment delivered by this Court is binding upon the sub-ordinate authority, more particularly, when the same is not stayed by the higher authority inspite of the fact that the judgment of this Court is pending before the Apex Court for adjudication. The respondents are directed to pay service tax already paid by the pursuant to the Notification 15/2017, which is declared ultra vires as observed in case of Sai Steel Ltd. - The respondent to refund the service tax at the earliest and not later 12 weeks from the date of receipt of this order along with interest as per the law - petition allowed.
Issues:
1. Validity of Notification No. 15/2017 and Notification No. 16/2017 under the Finance Act and Constitution. 2. Refund of service tax paid under impugned notifications. 3. Authority's power to sanction refund for taxes declared unconstitutional. 4. Binding nature of judgments delivered by the High Court on subordinate authorities. Analysis: 1. Validity of Notifications: The petitioner sought relief to strike down Notification No. 15/2017 and Notification No. 16/2017 as ultra vires the Finance Act and unconstitutional. The Court referenced a previous judgment where similar notifications were declared ultra vires, leading to the current petition for refund based on the same grounds. 2. Refund of Service Tax: The petitioner applied for a refund following a court order declaring the impugned notifications as ultra vires. Despite the rejection of the refund claim by the respondent-authority, citing the need for a writ petition or civil suit for such refunds, the Court emphasized the binding nature of its judgments on subordinate authorities. Consequently, the Court directed the respondents to refund the service tax paid by the petitioner pursuant to the invalidated Notification 15/2017 within a specified timeframe. 3. Authority's Power to Sanction Refund: The respondent-authority's rejection of the refund claim raised the issue of whether the authority had the power to sanction refunds for taxes declared unconstitutional. Citing legal precedents, the authority argued that such refunds fall outside the scope of specific statutes, necessitating alternative legal actions like writ petitions or civil suits for refund claims. The Court, however, upheld the petitioner's right to refund based on the earlier judgment's findings, emphasizing the binding nature of its decisions on lower authorities. 4. Binding Nature of Judgments: The Court reiterated the binding nature of its judgments on subordinate authorities, highlighting that the absence of a stay by a higher authority meant the lower authority was obligated to adhere to the High Court's decision. This underscored the importance of respecting and implementing judicial decisions unless stayed by a superior court. As a result, the Court allowed the petition, directing the respondents to refund the service tax paid by the petitioner under the invalidated notification within a specified timeframe, along with applicable interest as per the law. In conclusion, the High Court's detailed analysis and decision in this case underscore the significance of upholding the rule of law, ensuring the enforcement of judicial pronouncements, and safeguarding the rights of parties affected by unconstitutional regulations.
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