Bombay High Court
Apr Packaging Limited vs Union Of India Thr.Ministry Of ... on 16 April, 2016
Bench: B.P. Dharmadhikari
wp4833.03 1
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
NAGPUR BENCH
WRIT PETITION NO. 4833 OF 2003
APR PACKAGING LIMITED,
a company registered under the
provisions of Companies Act,
1956, having its Unit at Ashti,
P.S. Ashti - 442707, District -
Gadchiroli, Maharashtra, through
its Deputy Manager (Commercial)
Shri K. Vasudevan. ig ... PETITIONER
Versus
1. Union of India,
through the Ministry of Finance,
Udyog Bhavan, New Delhi.
2. The Superintendent, Central
Excise, Ballarpur Range,
Ballarpur, District - Chandrapur. ... RESPONDENTS
Shri A.A. Naik, Advocate for the petitioner.
.....
CORAM : B.P. DHARMADHIKARI &
P.N. DESHMUKH, JJ.
APRIL 16, 2016.
ORAL JUDGMENT : (PER B.P. DHARMADHIKARI, J.)
The petitioner company, which has availed services
of a Clearing and Forwarding Agents as also Transport agents,
received a communication dated 07.11.2003 inviting its
attention to this fact and also to the legal position that the
petitioner being responsible in law to collect the service tax, it
should have filed returns. By paragraph 5 of its
communication, it was called upon to file return by due date.
2. In writ petition, the prayer is to declare that the
proviso to Section 68 of the Finance Act, 1994, as amended in
2003 and Rule 7(A) of the Service Tax Rules, 1994, are
unconstitutional.
3. After hearing Shri Naik, learned counsel for the
petitioner, we find that the challenge as raised in Writ Petition
was in the backdrop of law as expounded by the Hon'ble Apex
Court in its judgment in the case of Laghu Udyog Bharati & Anr.
vs. Union of India & Ors., reported at (1999) 6 SCC 418. The
discussion in the said judgment in paragraphs 7 to 9 shows a
conclusion by the Hon'ble Apex Court that service tax was being
levied by reason of service offered and hence imposition was on
the person rendering it.
4. By Section 158 of the Finance Act, 2003, a proviso
has been added to Section 68 and by proviso (i), a person, who
engages Clearing and Forwarding Agent, has been made
responsible for collection of tax. By proviso (ii), a person who
avails services of goods transport operator, has been entrusted
with liability to collect tax. The provisions of Section 7A of the
Service Tax Rules 1994, as amended by Service Tax
Management Rules, 2003, obliges an assessee i.e. present
petitioner to collect tax, to file a return for the period from
16.07.1997 to 16.10.1998 in case of services rendered by
clearing and forwarding agents. If services of goods transport
operator are availed of, the period specified therein is from
16.11.1997 to 02.06.1998.
5. Our attention has also been fairly drawn to a later
judgment delivered by the Hon'ble Apex Court in the case of
Gujarat Ambuja Cements Ltd. & Anr. vs. Union of India & Anr.,
reported at (2005) 4 SCC 214. The discussion in said judgment
in paragraphs 20 to 22 and thereafter from paragraph 37
onwards up to paragraph 39 is relevant for the present matter.
The Hon'ble Apex Court has looked into its earlier judgment
mentioned supra and in paragraph 19 framed a question
whether by enacting Sections 116 and 117 of the Finance Act,
2000 and Section 158 of the Finance Act, 2003, base on which
it (Supreme Court) struck down Rules 2(1)(d)(xii) & (xvii) of
Service Tax Rules, 1994, have been displaced or removed. In
paragraph 21, the Hon'ble Apex Court has found that the
persons availing of the services i.e. services of Goods transport
operators or clearing and forwarding agents have been
explicitly made liable to pay service tax. In paragraph 22, it has
found that the statutory foundation for the decision in Laghu
Udyog Bharati & Anr. vs. Union of India & Ors. (supra) has been
replaced and the decision has ceased to be relevant for the
purposes of construing the provision before it.
6. In paragraph 37, the Hon'ble Apex Court has
considered the submission that as body of the Section 68 did
not cover the subject matter, there was no question of creating
an exception in respect thereto by any proviso. The contention
was thus by adding proviso (i) and (ii), the scope of original
Section 68 could not have been enlarged. In paragraph 38, the
Hon'ble Apex Court has held that Section 68 is a machinery
section which provides for incidence of tax while charging
section is Section 66. 2000 Amendment to Section 66 changed
the point of collection of tax from provider of service to "such
manner as may be prescribed". It has been found that the
Service Tax Rules, 1994 provided for collection and recovery of
tax from users or payers for the services and proviso to Section
68 prescribes the procedure for collection with reference to
services of goods transport operators and clearing agents. In
para 39 the Hon'ble Apex Court has concluded that the proviso
do not in any manner expand the sub-section and in fact it
gives effect to it.
7. In the light of this later judgment delivered by the
Hon'ble Apex Court, it is apparent that the communication
dated 07.11.2003 is in consonance with the amended
provisions after the Finance Act, 2003. The validity of this
procedure is already upheld by the later judgment of the
Hon'ble Apex i.e. Gujarat Ambuja Cements Ltd. & Anr. vs. Union
of India & Anr., (supra).
8. As such, we do not find any merit in the challenge
as raised. Writ Petition is, therefore, dismissed. Rule
discharged. However, in the facts and circumstances of the
case, there shall be no order as to costs.
JUDGE ig JUDGE
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