M/S Eastman Spinning Mills (P) vs. Union Of INDIA, Rep. By The

Held

The Court noted that the issue in these matters was covered by the Gujarat High Court's judgment in Sal Steels Limited v. Union of India. It was also brought to the Court's attention that the Apex Court had issued notice in an SLP filed by the Revenue challenging the Sal Steels Limited judgment, with no stay granted. The petitioners sought a refund of amounts paid. The respondents argued that refunds should not be granted at this stage and should be subject to the outcome of the SLP. The petitioners stated they had no objection to this course of action. Consequently, the Court disposed of the writ petitions by reserving the petitioners' right to claim a refund based on the outcome of the SLP concerning the Sal Steels Limited judgment. No order as to costs was made. The Court did not decide the merits of the ultra vires challenge to the notifications.

Facts

The petitioners, M/s Eastman Spinning Mills (P) Ltd. and M/s. Southern Petrochemicals Industries Corporation Limited, filed writ petitions challenging notifications issued under the Service Tax regime. Specifically, they challenged Notifications 15/2017-ST and 16/2017-ST dated April 13, 2017, and Notifications 14/2017, 15/2017, and 16/2017 dated April 13, 2017. The petitioners sought to declare these notifications as lacking legislative competency, ultra vires to the Finance Act, 1994, and consequently null and void. They also sought to quash show cause notices issued by the respondents proposing to levy service tax, interest, and penalty on ocean freight. In one instance, the petitioner sought a refund of service tax paid under protest. The tax periods are not explicitly stated for all petitions, but the challenges relate to the period under the Service Tax regime prior to GST.

Key Issues

1. Whether Notifications 15/2017-ST and 16/2017-ST dated April 13, 2017, and Notifications 14/2017, 15/2017, and 16/2017 dated April 13, 2017, issued under the Service Tax regime, are ultra vires the Finance Act, 1994, and consequently null and void, lacking legislative competency. The petitioner argued that these notifications traversed beyond the scope of Sections 64(3), 65B(44), 66D(e), and 68(2) of the Finance Act, 1994, thereby offending Articles 14 and 19(1)(g) of the Constitution of India. They relied on the Gujarat High Court's judgment in Sal Steels Limited v. Union of India. The respondents, represented by the Deputy Solicitor General, contended that the Delhi High Court in Pace Setters Business Solutions Pvt. Ltd v. Union of India and others, and the Allahabad High Court in M/s.R.C.Infra Digital Solutions Thru. Authorised Representative Mr.Ashish Kumar v. Union of India and others, had taken a view contrary to Sal Steels Limited. The respondents sought to defer the refund of amounts paid until the outcome of an SLP filed by the Revenue impugning the Sal Steels Limited judgment.