M/S Ntpc Limited vs. Additional Director General Dggi Coimbatore & Ors.
Facts
The petitioner, M/s NTPC Limited, filed a writ petition challenging a show cause-cum-demand notice (SCN) dated 29.12.2020, issued by the Additional Director General, DGGI, Coimbatore. The SCN raised a demand of ₹2353,44,05,056/- for service tax on capacity charges, late payment surcharges, and ocean freight on coal transportation. The petitioner also sought to quash the impugned Notification No. 22/2014-ST, declare Rule 10 of the Place of Provision of Service Rules, 2012, and Rule 2(1)(d)(EEC) of the Service Tax Rules, 1994, as ultra vires, and strike down Section 66B of the Finance Act, 1994, in relation to specific services. The demand for service tax on ocean freight had been struck down by the Gujarat High Court in Sal Steel Ltd. & Ors. v. Union of India and upheld by the Supreme Court in Union of India v. Mohit Minerals Pvt. Ltd.
Held
The Court held that the show cause notice (SCN) dated 29.12.2020 should be set aside. The reasoning was primarily based on the fact that a relevant circular (Circular dated 03.08.2022) from the Department of Revenue, Ministry of Finance, Government of India, which addressed the taxability of capacity charges and late payment surcharges, was issued after the SCN was issued. Therefore, the authority issuing the SCN did not have the benefit of this circular. The Court also noted that the petitioner would be satisfied if the SCN was set aside and the matter was relegated for issuance of a fresh show cause notice. The Court clarified that the respondent is not precluded from issuing a fresh SCN after considering the import of the said circular and the decisions in Messrs Sal Steel Ltd. & Ors. v. Union of India and Union of India v. Mohit Minerals Pvt. Ltd. The time period from 29.12.2020 till the date of the judgment was to be excluded for limitation purposes if a fresh SCN was issued. The specific issues regarding the vires of the notification and rules were not expressly decided but were implicitly left open for consideration in a fresh SCN.
Key Issues
1. Whether Notification No. 22/2014-ST dated 16.09.2014 is ultra vires and violative of Article 14 of the Constitution of India and Rule 3 of the Service Tax Rules, 1994. (Petitioner's contention: The notification is ultra vires and discriminatory). 2. Whether the proceedings initiated vide the SCN dated 29.12.2020 are ultra vires Articles 246 and 265 of the Constitution of India, without jurisdiction, and contrary to Circular No. 1053/03/2017-CX dated 10.03.2017. (Petitioner's contention: The SCN is without jurisdiction and contrary to established circulars). 3. Whether Rule 10 of the Place of Provision of Service Rules, 2012, and Rule 2(1)(d)(EEC) of the Service Tax Rules, 1994, are ultra vires the Finance Act, 1994. (Petitioner's contention: These rules are ultra vires the parent Act). 4. Whether Section 66B of the Finance Act, 1994, read with Rule 10 of the POPS Rules, imposes an illegal levy of Service Tax on services by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India, where both service provider and recipient are located outside India. (Petitioner's contention: Such a levy is beyond the legislative competence and the scope of the Act). Revenue's contention: Not recorded in the judgment.
Sections Cited
Section 73, Section 78, Section 77(2), Section 66B
AI-generated summary — verify with the full judgment below
W.P.(C) No.9975/2021 $~17 * IN THE HIGH COURT OF DELHI AT NEW DELHI %
Date of Decision: 01.11.2023 + W.P.(C) 9975/2021 M/S NTPC LIMITED
.....Petitioner
Through: Mr. V. Lakshmikumaran, Mr. Karan Sachdev & Mr. Agrim Arora, Advs.
versus ADDITIONAL DIRECTOR GENERAL DGGI COIMBATORE & ORS.
..... Respondents
Through: Mr. Satish Kumar, SSC for R1to3. Mr. Asheesh Jain, CGSC with Mr. Gaurav Kumar, Adv. Mr. Anurag Ojha, SSC for R5. CORAM: HON'BLE MR. JUSTICE VIBHU BAKHRU HON'BLE MR. JUSTICE AMIT MAHAJAN
VIBHU BAKHRU, J.
The petitioner has filed the present petition, inter alia, praying as under: - “a) Issue an appropriate writ, order or direction quashing the impugned Notification No. 22/2014-ST dated 16.09.2014 issued by Respondent No. 3 and declaring the same as ultra vires & violative of Article 14 of the Constitution of India and Rule 3 of the Service Tax Rules, 1994; and/or W.P.(
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