2024 (11) TMI 722 - AT - Service Tax

Entitlement for abatement of 70% from the gross value of the purpose of paying service tax on ocean freight or otherwise - Lower authorities have confirmed the demand of differential duty attributed to the abatement portion on the ground that the appellant have not fulfilled the condition for availing the exemption under Notification No. 26/2012-ST dated 26.06.2012 (Serial No. 10). HELD THAT - Levy of service tax itself on ocean freight was held ultravirus in the case of SAL Steel Ltd. 2019 (9) TMI 1315 - GUJARAT HIGH COURT therefore, for this reason when the entire service tax is not sustainable the differential service tax demand is also not sustainable. In the appellant s own case for the earlier period this Tribunal 2024 (9) TMI 1174 - CESTAT AHMEDABAD remanded the matter to the adjudicating authority for passing a fresh order. Thus this matter should go back to the adjudicating authority for deciding afresh keeping in mind the observations made supra.

Summary

Issues:
1. Entitlement to abatement of 70% from the gross value for paying service tax on ocean freight.
2. Sustainability of differential service tax demand.
3. Applicability of conditions for availing exemption under Notification No. 26/2012-ST.

Analysis:
The judgment deals with the issue of whether the appellant is entitled to abatement of 70% from the gross value for the purpose of paying service tax on ocean freight. The lower authorities confirmed the demand of differential duty, citing the appellant's failure to fulfill conditions for availing exemption under Notification No. 26/2012-ST. The appellant argued that since the levy of service tax on ocean freight itself was held ultravirus by the Hon'ble Gujarat High Court in a previous case, the differential service tax demand is also not sustainable. The appellant requested a remand similar to a previous order in their case for the earlier period.

The Authorized Representative for the Revenue did not object to the remand. The Tribunal considered the submissions and records, noting that in the appellant's previous case, the matter was remanded for similar issues. The Tribunal observed that the service tax demand was confirmed on ocean freight for vessel transportation of imported goods, but the Hon'ble Gujarat High Court had later held the levy unconstitutional. As the judgment was not delivered before the lower authorities passed their orders, the matter needed reconsideration in light of the changed circumstances of the law.

Therefore, the Tribunal set aside the impugned order and allowed the appeal by remanding it to the adjudicating authority for a fresh decision considering the judgment in the SAL Steel Ltd case and other relevant issues. The Tribunal emphasized the need for the adjudicating authority to reconsider the matter in line with the observations made in the Tribunal's previous order. The impugned order was set aside, and the appeal was allowed by way of remand to the adjudicating authority for a fresh decision.

In conclusion, the Tribunal's decision focused on the sustainability of the differential service tax demand in light of the previous judgment on the levy of service tax on ocean freight and the conditions for availing exemption under the relevant notification. The matter was remanded for a fresh decision by the adjudicating authority to consider the changed legal circumstances and the observations from the Tribunal's previous order.