Sabmiller INDIA Limited & Anr. vs. Union Of INDIA & Ors.

Held

The Court held that the challenge to the levy of service tax on license fees and application fees for alcoholic liquor for human consumption had been rendered moot. This was based on the undisputed fact that the GST Council, in its 26th meeting, decided that such fees were not leviable to GST/Service Tax. The Central Government subsequently accepted this decision. The Court noted the communication from the Ministry of Finance, Department of Revenue, dated July 31, 2018, which directed field formations to keep show cause notices issued for the levy of Service Tax on these fees for the period April 1, 2016, to June 30, 2017, in abeyance. Consequently, the writ petitions were disposed of in terms of this development, granting relief to the petitioners without a detailed examination of the legality of the original levy.

Facts

The petitioners, Jagatjit Industries Limited and Sabmiller India Limited, filed writ petitions challenging the levy of service tax on license fees paid for liquor licenses. The petitions were filed before the GST regime came into effect. During the pendency of these proceedings, the GST Council, in its 26th meeting on March 10, 2018, decided that GST/Service Tax could not be levied on license fees and application fees for alcoholic liquor for human consumption. The Central Government accepted this decision on July 31, 2018. A communication from the Ministry of Finance, Department of Revenue, to the Joint Commissioner (Legal), GST Delhi East, confirmed this decision and directed that show cause notices issued for the levy of Service Tax on such fees for the period April 1, 2016, to June 30, 2017, be kept in abeyance.

Key Issues

1. Whether the levy of service tax on license fee and application fee for alcoholic liquor for human consumption is legally sustainable, considering the subsequent decision of the GST Council and acceptance by the Central Government? (Question of law) Petitioner's contention: The petitioners argued that the challenge to the levy of service tax on license fees has become moot due to the GST Council's decision and the Central Government's acceptance, rendering the impugned demand unsustainable. They relied on the communication from the Ministry of Finance as evidence of this change in policy. Revenue's contention: The respondents (Union of India and others) did not present any arguments against the petitioners' claim. Their counsel acknowledged the GST Council's decision and the Central Government's acceptance, indicating that the issue was resolved by these developments.