Ambika Cotton Mills LTD. vs. Union Of INDIA
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The petitioner, Ambika Cotton Mills Limited, filed two writ petitions before the Madurai Bench of the Madras High Court. In W.P.(MD) No.8859 of 2018, the petitioner challenged the constitutional validity of Notification No.1/2017 dated 12.01.2017 and Notification No.15/2017 dated 13.04.2017 issued by the Ministry of Finance, Department of Revenue. In W.P.(MD) No.21628 of 2022, the petitioner sought to quash a Demand-Cum Show Cause Notice No.06/2022-ST dated 04.08.2022 issued by the Directorate General of Goods and Services Tax Intelligence. The core of the dispute revolves around the levy of service tax on ocean freight.
Held
The Court held that the challenges to Section 66(2) of the Finance Act, 1994, impugned Circular No.206/4/2017 – Service Tax, dated 13.04.2017, and impugned Notifications issued by the Central Government under the Finance Act, 1994, failed. Consequently, the writ petitions challenging these were liable to be dismissed. However, the Court found that the petitioners were not the recipients of service for the purpose of Notification No.3/2017-ST dated 12.01.2017, which amended Notification No.30/2012-ST. Therefore, there was no scope for demanding service tax from the petitioners. The Court quashed the impugned show cause notices as there was no justification for them. The respondents were also directed not to issue similar show cause notices to importers and steamer agents for the period between 22.01.2017 and 30.06.2017. For refund claims, petitioners were directed to file within 30 days, and claims were to be disposed of within 60 or 90 days as per Supreme Court directions.
Key Issues
1. Whether Notification No.1/2017 dated 12.01.2017 and Notification No.15/2017 dated 13.04.2017 issued by the 1st respondent are unconstitutional and ultra vires the Finance Act, 1994? 2. Whether the Demand-Cum Show Cause Notice No.06/2022-ST dated 04.08.2022 issued by the 1st respondent is arbitrary and illegal? The petitioner argued that the notifications and the subsequent show cause notice were illegal. The respondents, represented by the Union of India and GST authorities, contended that the levy was valid. The Court noted that the issue was covered by a Division Bench decision of the Gujarat High Court in Sal Steel Limited Vs. Union of India and a previous decision of this Court in The Chennai and Ennore Ports Steamer Agents Association Vs. Union of India.
Sections Cited
Section 66(2), Section 68(2)
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Before: and
Heard together (2 matters)
Read from the judgment's own cause title. This page is filed under one of them.
Heard the learned counsel for the petitioner and the learned Senior Ministry of Finance, New Delhi and others reported in 2023-VIL-293-MAD-ST. 3.In the same order, the issue relating to leviability of service tax was also considered in length and answered in favour of the assessees. Operative portion of the order passed by this Court reads as under: “164.n the result, it is held as follow:- i. The challenges to Section 66(2) of the Finance Act, 1994, impugned Circular No.206/4/2017 – Service Tax, dated 13.04.2017 and impugned Notifications issued by the Central Government under the provisions of the Finance Act, 1994 fail. Therefore, Writ Petitions in Table, 1,2,3 4 are liable to be dismissed and are accordingly dismissed. ii. These petitioners are however not the recipient of service for the purpose of the impugned Notification No.3/2017- ST dated 4/7 https://www.mhc.tn.gov.in/judis
2017 amending Notification No.30/2012- ST dated 20.06.2012 issued under Section 68(2) of the Finance Act,1994. iii. Therefore, there is no scope for demanding service tax from these petitioners in view of the defects pointed out in the impugned Notification No.3/2017-ST dated 12.01.2017 amending Notification No.30/2012-ST dated 20.06.2012 issued under Section 68(2) of the Finance Act,1994. Therefore, there is no justification in the impugned Show Cause Notices in Table-5. These show cause notices are therefore quashed. iv. The respondents shall also not issue any show cause notices to the importers and steamer agents for the period covered by this order ie. for the period between 22.01.2017 and 30.06.2017 for similar activity. v. As far as refunds in Table 6 are concerned, the petitioners are directed to file refund claims within 30 days from the date of receipt of a copy of this order, if no claim has already been made. vi. All the refund claims shall be disposed of within a period of 60 days or 90 days, as the case may be, in accordance with the law laid down by the Hon'ble Supreme Court in Mafatlal Industries Private Limited vs. Union of India, 1997 (89) E.L.T.(S.C.) - 1996- VIL-01-SC-CE.
These Writ Petitions stand disposed of with the above observations. No costs. Consequently, connected Miscellaneous Petitions are closed.” 4.In the said order, several decisions of this Court and that of the other Courts were considered while coming to a conclusion that there is no justification levy of service tax on the ocean freight. 5/7 https://www.mhc.tn.gov.in/judis
Accordingly, W.P.(MD) No.8859 of 2018 stands closed and W.P.(MD) No.21628 of 2022 stands allowed. The impugned show cause notice No.6/2022- ST dated 04.08.2022 bearing Ref.F.No.INV/DGGI/MRU/22/2018-ST is hereby is set aside. No costs. Consequently, connected Miscellaneous Petitions are closed. Index : Yes / No 05.06.2024 Internet : Yes / No mm 6/7 https://www.mhc.tn.gov.in/judis
C.SARAVANAN, J.
mm W.P.(MD) Nos.8859 of 2018 and 21628 of 2022 05.06.2024 7/7 https://www.mhc.tn.gov.in/judis
Reproduced from the public record of the Madras High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.