M/S Raviraj Foils Limited vs. Deputy Commissioner, CGST

Facts

The petitioner, M/s. Raviraj Foils Limited, engaged in the manufacture of Aluminium Foil, filed a writ application challenging several Service Tax Notifications (1/2017-ST, 2/2017-ST, 3/2017-ST, 14/2016-ST, 15/2017-ST, 16/2017-ST) and a circular (No.206/4/2017-ST). The petitioner also challenged a show-cause notice dated 20/11/2019 issued by the Deputy Commissioner, CGST. The petitioner sought to declare these notifications and the show-cause notice as ultra vires to the Finance Act, 1994, and unconstitutional, requesting them to be quashed and set aside. Additionally, the petitioner sought a stay on the adjudication of the show-cause notice pending the petition's disposal.

Held

The Court held that it was not necessary to adjudicate the present petition independently in view of its prior decision in M/s. Sal Steel Ltd and others V/s. Union of India. The Court quoted paragraph 58 of the Sal Steel judgment, which stated that 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, were struck down as ultra vires Sections 64, 66B, 67, and 94 of the Finance Act, 1994. Consequently, the proceedings initiated against the writ applicants in that case by way of show cause notice and inquiries for collecting service tax from them as importers on sea transportation service in CIF contracts were quashed and set aside with all consequential reliefs and benefits. Applying this precedent, the present petition was disposed of.

Key Issues

1. Whether Notification Nos. 1/2017-ST, 2/2017-ST, 3/2017-ST, 14/2016-ST, 15/2017-ST, and 16/2017-ST, along with circular No.206/4/2017-ST and the show-cause notice dated 20/11/2019, are ultra vires to the Finance Act, 1994, and unconstitutional, as contended by the petitioner. The petitioner argued that these provisions and the notice were beyond the scope of the Finance Act, 1994, and thus invalid. The respondent's arguments are not recorded in the judgment. 2. Whether the proceedings initiated against the petitioner via the show-cause notice for collecting service tax as importers on sea transportation service in CIF contracts should be quashed and set aside. The petitioner sought this relief based on the alleged invalidity of the underlying notifications and circular.