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TMI Blog2024 (1) TMI 578X X X X Extracts X X X X X X X X Extracts X X X X ..... s by a vessel from a place outside India up to the custom station of clearance in India, even in case of C.I.F contracts, was challenged before Hon ble Gujarat High Court in MESSRS SAL STEEL LTD. 1 OTHER (S) VERSUS UNION OF INDIA [ 2019 (9) TMI 1315 - GUJARAT HIGH COURT] . The validity of Circular No.206/4/2017-ST dated 13.04.2017 was also challenged in the said writ petition, where it was held that The Notification Nos. 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 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As the services of ocean freight were provided to the foreign supplier and not to the Appellant, hence the Appellant was not required to discharge service tax on the ocean freight element. 3. The audit of the appliance unit for the period April, 2017 to June, 2017 was conducted on 19.02.2018, 02.02.2018 and 27.03.2018, during which the audit team pointed that service tax exemption on ocean freight has been withdrawn and accordingly the Appellant is liable to pay service tax on ocean freight under reverse charge mechanism. The Appellant was therefore directed to pay the amount of service tax along with interest and penalty immediately and pursuant to such direction, the Appellant paid an amount of Rs.10,67,046/- on 27.03.2018 under-protes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the service recipient, hence the Appellant was not required to pay service tax on ocean freight. The ld. counsel further relied on the decision of Hon ble Gujarat High Court in SAL Steel Ltd. v. Union of India (2020) 37 GSTL 1. 6. Per-contra, the ld. DR relied and reiterated the findings recorded in the impugned order. As regards the decision of Hon ble Gujarat High Court, the ld. DR submitted that the revenue has challenged the said decision before the Hon ble Supreme Court but as on date there is no stay of the order of the High Court. 7. Heard both sides and perused the appeal records. 8. I find that the constitutional validity of Notification No.15/2017-ST dated 13.04.2017 and Notification No.16/2017-ST dated 13.04.2017 maki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 basis of quantity (i.e. DMT-Dry Metric Ton) for CIF Mundra Port basis. When service tax is to be computed and assessed on the value of the service as laid down under the machinery provision of Section 67 of the Finance Act, no service tax can be assessed and charge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly it is held that the Appellant is not liable to pay service tax on ocean freight. 11. As regards the appeal preferred by the revenue against the judgment of Hon ble Gujarat High Court, no stay order has been passed by the Hon ble Supreme Court and therefore the dicta laid down in SAL Steel Ltd. (supra) remains to be operative and therefore the appeal is liable to be allowed. 12. At this stage, it is also pertinent to note that the same argument regarding pendency of appeal against SAL Steel Ltd. (supra) was also raised by the revenue before a coordinate bench of this Tribunal in Commissioner of Service Tax, Ahmedabad v. Kiri Dyes and Chemical Ltd. being Service Tax Appeal No.10616 of 2021-SM and by Final Order No.A/10507/2023 dated ..... X X X X Extracts X X X X X X X X Extracts X X X X
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