M/S.Bengal Energy LTD. vs. Union Of INDIA

Held

The Court held that the matter concerning GST on ocean freight was covered in favour of the Assessee by the Supreme Court's judgment in Union of India v. Mohit Minerals Pvt. Ltd. For service tax, the Court followed the Gujarat High Court's judgment in SAL Steel Ltd. v. Union of India, which had answered the same question in favour of the Assessee by quashing the impugned notification. The Court noted that although the Union of India had challenged the SAL Steel Ltd. judgment by filing an SLP, no interim order had been granted. Consequently, the Court quashed the impugned Notifications at Annexures 4, 5, 6, and 8. The Petitioner-Assessee was permitted to apply for a refund of the service tax paid, along with statutory interest, in accordance with the law. No issue was expressly left undecided.

Facts

The Petitioner, M/s. Bengal Energy Ltd., challenged a Notification dated April 13, 2017, and a circular of the same date. These documents imposed service tax on ocean freight for services provided by a person in a non-taxable territory to another person in a non-taxable territory, specifically for the transportation of goods by vessel from outside India to an Indian customs station. The Petitioner also sought a refund of service tax paid. The matter concerning GST on ocean freight was already covered by the Supreme Court's judgment in Union of India v. Mohit Minerals Pvt. Ltd. For service tax, the Petitioner relied on the Gujarat High Court's decision in SAL Steel Ltd. v. Union of India, which quashed the same notification. Although the Union of India had filed an SLP against the SAL Steel Ltd. judgment, no interim order was granted.

Key Issues

1. Whether service tax was leviable on ocean freight for services provided by a person located in a non-taxable territory to a person located in a non-taxable territory by way of transportation of goods by a vessel from a place outside India to the customs station in India, in light of the Notification dated April 13, 2017 and the circular of the same date. Petitioner's arguments: The Petitioner contended that the impugned notification and circular were liable to be quashed. They relied on the Supreme Court's judgment in Union of India v. Mohit Minerals Pvt. Ltd. concerning GST on ocean freight. For service tax, they placed reliance on the Gujarat High Court's judgment in SAL Steel Ltd. v. Union of India, which had quashed the identical notification. The Petitioner highlighted that while the Union of India had challenged the SAL Steel Ltd. judgment by filing an SLP, no interim order had been passed staying its operation. Revenue's arguments: The judgment records no specific arguments made by the Opposite Parties (Revenue/State).