2024 (7) TMI 997 - AT - Service Tax

Service tax on ocean freight - Constitutional validity of N/N. 15/2017-ST and 16/2017-ST making Rule 2(1)(d)(EEC) and Rule 6(7CA) of the Service Tax Rules and inserting explanation-V to reverse charge N/N. 30/2012-ST - Service tax on sea transportation service in CIF contracts - HELD THAT - The issue is no longer res-integra and has been decided by the Hon ble Gujarat High Court in case of MESSRS SAL STEEL LTD. 1 OTHER (S) VERSUS UNION OF INDIA 2019 (9) TMI 1315 - GUJARAT HIGH COURT . In fact the matter was decided by the First Appellate authority following the said decision. This position has been admitted by the revenue in the appeal filed. This appeal ahs been filed mainly for the reason that revenue contemplates to challenge the order of Hon ble Gujarat High Court before Hon ble Supreme Court. The SLP filed by revenue bearing Diary No 27023 of 2020 against the order of Hon ble High Court is still pending admission. In absence of any admission or stay from Hon ble Supreme Court there is no appropriate reason for not following the judicial precedent available in form of the order Hon ble Gujarat High Court. Instructions issued by the CBIC to its officer cannot be a reason for not following the well settled principles of judicial discipline and precedence - In any case the impugned order which relies on the said order of Hon ble Gujarat High Court can be faulted for this reason. There are no merits in the appeal filed by the Revenue - appeal filed by Revenue is dismissed.

Summary

Issues:
1. Interpretation of a judgment by the Hon'ble High Court of Gujarat regarding service tax on ocean freight.
2. Appeal against the Order-in-Appeal setting aside the demand for service tax.
3. Contemplation of filing an appeal before the Hon'ble Supreme Court challenging the Gujarat High Court judgment.
4. Adherence to judicial discipline and precedence in tax matters.

Analysis:
1. The appeal was filed by the Revenue against an Order-in-Appeal setting aside the demand for service tax on ocean freight. The Commissioner (Appeals) relied on a judgment by the Hon'ble High Court of Gujarat in the case of Sal Steel Limited, which struck down certain notifications and rules related to service tax, leading to the quashing of proceedings against the appellant. The Revenue contended that the Gujarat High Court judgment was not legal and proper and that an appeal was being contemplated before the Hon'ble Supreme Court. The Revenue argued that the Commissioner's decision was based solely on the Gujarat High Court judgment, which they deemed improper. The Revenue sought to contest adverse judgments as per CBEC instructions, especially when the constitutional validity of provisions or notifications is challenged.

2. During the hearing, the Authorized Representative for the Revenue reiterated the grounds of appeal, while the respondent requested an adjournment despite previous directives. The Tribunal considered the impugned order, the grounds of appeal, and the arguments presented. It was noted that the issue had already been decided by the Hon'ble Gujarat High Court in the Sal Steel Limited case, a fact acknowledged by the Revenue in their appeal. The Revenue's appeal was mainly to challenge the Gujarat High Court's decision before the Supreme Court, with a pending SLP against the High Court's order. However, in the absence of any stay or admission by the Supreme Court, the Tribunal found no valid reason to deviate from the judicial precedent set by the Gujarat High Court. The Tribunal emphasized the importance of judicial discipline and precedence over CBIC instructions, ultimately dismissing the Revenue's appeal as the issue was already settled by the Gujarat High Court.

3. The Tribunal's decision was based on the well-established principle of following judicial precedents and maintaining judicial discipline in tax matters. Despite the Revenue's intention to challenge the Gujarat High Court judgment before the Supreme Court, the lack of any stay or admission by the Supreme Court meant that the Tribunal upheld the Order-in-Appeal setting aside the demand for service tax on ocean freight. The Tribunal emphasized that adherence to established judicial principles outweighed administrative instructions, leading to the dismissal of the Revenue's appeal.

Conclusion:
The Tribunal dismissed the Revenue's appeal, upholding the Order-in-Appeal that set aside the demand for service tax on ocean freight based on the precedent set by the Hon'ble High Court of Gujarat. The decision highlighted the importance of judicial discipline and precedence in tax matters, emphasizing the significance of following established legal principles over administrative directives.