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TMI Blog2024 (8) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... conferred upon the Central Government for charging and collecting the tax on extra territorial events for the services rendered and consumed beyond the taxable territory i.e. beyond India, the Court held that since the Act is not applicable to the territories other than India, therefore, the Executives cannot have any power to make rules for territories beyond India - the High Court laid down that the person receiving the services of sea transportation in CIF Contracts is the seller/supplier of the goods located in a foreign territory and the Indian importers are not the persons receiving sea transportation services for the simple reason that they receive the goods contracted by them and they have no privity of contract with the shipping li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The impugned order deserves to be set aside and the appeal is allowed. - MS. BINU TAMTA, MEMBER (JUDICIAL) Ms. Priyanka Goel , Advocate for the appellant. Shri Arun Sheoran, Authorised Representative for the respondent. ORDER The order-in-appeal no. IND-EXCUS-000-APP-21-2023-24 dated 26.04.2023 affirmed the levy of service tax on the Ocean Freight , as proposed in the show cause notice, contrary to the decision of the Gujarat High Court in the case of Sal Steel Limited Vs. Union of India [2020 (37) ELT GSTL 3 (Gujarat)]. 2. The facts of the case are that the appellant is engaged in manufacturing of Soya Lecithin. On the basis of the audit for the period F.Y. 2015-16 to F.Y. 2017-18 (upto June, 2017), it was observed that the appellant h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rly conceded that the issue stands settled by the Gujarat High Court in Sal Steel Ltd. (supra) and though an appeal has been preferred by the Revenue against the said judgement, however, there is no stay order passed by the Apex Court and, therefore, the decision of the High Court in Sal Steel Ltd. (supra), remains operative. 7. Considering the decision in Sal Steel Ltd. (supra), I find that the law has been categorically settled. Taking the view that as per the scheme of the Finance Act and the Service Tax Rules, there is no power conferred upon the Central Government for charging and collecting the tax on extra territorial events for the services rendered and consumed beyond the taxable territory i.e. beyond India, the Court held that sin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Government to collect and recover service tax only from the person providing the service or from the person receiving the service, and not from a third party. The rule making power of Section 94 also does not permit the Central Government to make rules for recovering service tax from a third party who is neither the service provider nor the service receiver. 39. Therefore, the impugned provisions i.e. Rule 2(1)(d)(EEC) and Explanation-V to Notification No. 30/2012-S.T. are ultra vires Section 65B(44) defining service and Section 68, and also Section 94 of the Finance Act. 8.1 Further, the issue that there was no machinery provision was considered and the Court observed as under:- 44. Even if it is assumed that service tax can be recovere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... toms Act, 1962. In absence of any power vested in the Central Government to fix value of any service by way of making a rule or a notification, Rule 6(7CA) of the Service Tax Rules is ultra vires the Rule making power. Secondly, it is an option under Rule 6(7CA) to pay service tax on the amount calculated @ 1.5% of CIF value of the imported goods; but if the importer does not exercise this option, then there is void because actual value of this service i.e. ocean freight is not known even to the Revenue officers. Therefore, the scheme of taxation would fall and fall in absence of a machinery provision for valuation of the service when tax is proposed to be recovered from a third party not having any information about the value of such servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , which is subsequent to the judgement of the High Court of Gujarat and so were the orders passed by the lower authority, i.e. Order-in-Original on 25.02.2022 and Order-in-Appeal on 26.04.2023. Perusing the show cause notice and these orders, I find that the appellant had categorically relied on the decision of the Gujarat High Court in Sal Steel Ltd. (supra), however, the Asstt. Commissioner issuing the show cause notice and the authorities below failed to appreciate or follow the said decision, which was binding on them. In fact, the contention of the appellant on the basis of the decision of the High Court of Gujarat that they have not paid the Ocean Freight to the shipping company as they are neither the service provider nor the service ..... X X X X Extracts X X X X X X X X Extracts X X X X
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