M/S.Greenstar Fertilizers Limited vs. Union Of INDIA

Facts

M/s. Greenstar Fertilizers Limited (Petitioner) filed a writ petition seeking a declaration that Notifications No.14/2016-ST, 15/2017-ST, and 16/2017-ST, dated 13.04.2017, issued by the Ministry of Finance (1st Respondent), are ultra vires the Constitution and the Statute. The Petitioner also sought a consequential direction to the Principal Commissioner of GST & Central Excise (Audit), Coimbatore (2nd Respondent), to grant a refund of Rs.61,99,895/- paid as Service Tax towards Ocean Freight Services under the impugned notifications. The Petitioner contended that these notifications exceeded the scope of Section 68(2) of the Finance Act, 1994, and violated Articles 14, 19(1)(g), 245, and 269A of the Constitution.

Held

The Court held that the relief sought by the petitioner was liable to be granted, as the issue had been decided in favour of the assessees by the Madras, Gujarat, and Bombay High Courts. The Court referred to the operative portion of the order in Sal Steels Limited (supra), which struck down similar notifications as ultra vires Sections 64, 66B, 67, and 94 of the Finance Act, 1994, and quashed consequential proceedings. The Court also noted its own decision in Chennai and Ennore Ports Streamer Agents Association Vs. Union of India, which, while adopting a slightly different approach, arrived at the same conclusion. The Bench in that case held that no proper machinery was provided under the impugned notifications to shift the burden of service tax to the petitioner, who were not recipients of the taxable service. Consequently, the Court quashed the impugned notifications to the extent they were challenged. The Petitioner was granted two weeks from the date of receipt of the order to file a reply regarding other issues, which would be adjudicated in accordance with law. The Writ Petition was allowed.

Key Issues

1. Whether Notifications No.14/2016-ST, 15/2017-ST, and 16/2017-ST dated 13.04.2017, issued by the Ministry of Finance, are ultra vires the Constitution and the Statute, specifically Section 68(2) of the Finance Act, 1994, and consequently violate Articles 14, 19(1)(g), 245, and 269A of the Constitution of India? Petitioner's Contentions: The Petitioner argued that the impugned notifications traverse beyond the scope of Section 68(2) of the Finance Act, 1994. They relied on pronouncements from the Madras, Gujarat, and Bombay High Courts in similar cases, including M/s.Eastman Spinning Mills (P) Limited Vs. the Secretary, Union of India, Sal Steels Limited Vs. Union of India, and Santhan Textile Private Limited Vs. Union of India. The Petitioner sought a declaration that the notifications are ultra vires and consequently sought a refund of Service Tax paid. Respondents' Contentions: The learned counsels for the respondents were ad idem on the position that the relief sought by the petitioner is liable to be granted, acknowledging that the issue had been decided in favour of assessees by other High Courts.