The Commissioner, Cgst And Central ... vs Aegis Limited on 3 December, 2025

Author: A.S. Supehia

Bench: A.S. Supehia

                                                                                                           NEUTRAL CITATION




                             C/TAXAP/85/2025                                 ORDER DATED: 03/12/2025

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                                     IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

                                          R/TAX APPEAL NO. 85 of 2025
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                        THE COMMISSIONER, CGST AND CENTRAL EXCISE COMMISSIONERATE
                                                        SURAT
                                                        Versus
                                                   AEGIS LIMITED
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                      Appearance:
                      MR CB GUPTA(1685) for the Appellant(s) No. 1
                      MR VISHAL AGRAWAL for MS. DIMPLE K. GOHIL(7451) for the Opponent(s) No.
                      1
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                        CORAM:HONOURABLE MR. JUSTICE A.S. SUPEHIA
                                               and
                                HONOURABLE MR. JUSTICE PRANAV TRIVEDI

                                                   Date : 03/12/2025
                                                     ORAL ORDER

(PER : HONOURABLE MR. JUSTICE A.S. SUPEHIA)

1. Heard learned advocate Mr. C.B. Gupta for the appellant and

learned advocate Mr. Vishal Agrawal with learned advocate

Ms.Dimple K. Gohil for the respondent.

2. The appellant has proposed the following substantial questions

of law :-

"(i) Whether the Hon'ble CESTAT was right in reassessing the Service Tax paid by the respondent during the proceedings of examining Refund claim under Section 11B of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994?

(ii) Whether in the facts and circumstances of the case, the Hon'ble CESTAT is right in deciding the issue of refund claim, instead of solely confining themselves to the core issue of correctness or otherwise of Assistant Commissioner's decision to return the refund claim with direction to submit it complete in all aspects ?

(iii) Whether in the facts and circumstances of the case, the Hon'ble CESTAT is right in allowing the appeal of the respondent, with consequential relief?"

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3. However, we find that in the present appeal, in fact no

substantial questions of law worth the name arise in view of the

admitted facts by the appellant before the Customs, Excise and

Service Tax Appellate Tribunal, West Zonal Bench, Ahmedabad (For

Short the "Tribunal") and before us.

4. The brief facts of the case are that the appellant filed a refund

claim of Rs. 4,80,21,610/- with the Assistant Commissioner, Service

tax, Surat-I on 16.11.2011 on the ground that the service provided by

M/s Essar Engineering Limited, Hazira (Now merged with M/s AEGIS

Ltd.) under the category of services "consulting Engineers Services"

to M/s Minnesota Steel Industries, LLC, USA (now known as Essar

Steel Minnesota LLC) are export of services and service tax was not

leviable under the Finance Act, 1994 as the services rendered by M/s

Essar Engineering Ltd. were consumed outside India. Service tax

inadvertently paid by them on receipt of payment in Indian Rupee

made by M/s Essar Engineering Services Ltd. consequent to the

novation agreement entered with M/s Essar Engineering Services

Limited, (EESL) M/s Essar Steel Minnesota LLC, UAE (ESML) and

M/s Essar Projects (India) Ltd. (EPIL). The appellant in para 1 (g) of

refund claim and in their letter dated 21.02.2012 clarified that the

payment for the services would be received in foreign exchanges by

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M/s Essar Projects (India) Ltd. (EPIL) at a future time. Since payment

for said services has not been received in convertible foreign

exchange as stipulated in Rule 3(2)(b) of Export of Services Rules,

2005, the condition required to be fulfilled for treating as export of

services had not been fulfilled.

4.1. It is the case of the appellant that on this ground the Assistant

Commissioner, Service Tax, Surat-I issued order issued in the form of

letter dated 30.04.2012 directing the appellant to file the refund

claim duly completed in all respects. Being aggrieved by the said

order, the appellant filed an appeal before the Commissioner

(Appeals), Central Excise, Customs and Service Tax, Surat-I, who by

impugned Order-In-Appeal dated 18.07.2013 rejected the appeal of

the appellant on the ground that Assistant Commissioner's

communication dated 30.04.2012 was only interim and

administrative communication and no decision has been reached by

him, by passing any order on refund claim and therefore there are no

valid grounds for filing an appeal against such letter. Therefore, the

present appeal is preferred by the appellant.

5. The afore-noted facts which are recorded by the Tribunal are in

fact not controverted by the appellant.

6. The Tribunal has also considered that there was sheer violation

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of the principles of natural justice which was apparent on record as

the authorities below neither considered the judgments relied upon

by the respondent nor there was any finding distinguishing the same.

It is pertinent to note that the entire issue was with regard to the

jurisdiction exercised by the authorities below and in this regard, the

Tribunal has held as under :-

"14. We find that if the tax itself is not leviable, it would be immaterial whether the payment for the services is received in Indian Currency or foreign currency. When the services in question were not taxable at all, as they were consumed outside India, the refund claim could not have been returned as premature on the ground that payment for the services were to be received in foreign exchange by M/s EPIL on a future date. Therefore the impugned order-in-appeal passed by the Ld. Commissioner in the present matter legally not correct.

15. We find strong force in appellant's claim on service being outside the taxable territory of India. Admittedly the disputed transaction related to services happened outside India. The service in respect of such transaction is rendered, received and consumed outside India. The Tribunal's decision in Cox & Kings India Ltd. 2014 (35) S.T.R. 817. (supra) is applicable to the present case. The essence of taxability of service is that it should be taxed in the jurisdiction of its consumption and where is provided. Here, the service, namely "consulting engineering services, is rendered outside India and duly consumed by the recipient-M/s. Minnestoa Steel Industries, LLC, USA (Now known as Essar Steel Minnesota LLC) outside India. We find service tax liability on such service is not sustainable for want of jurisdiction. It is on records that the identified service element has been wholly rendered and consumed abroad. As Hon'ble Supreme Court in the case of Ishikawa-Ima- Harima Heavy Industries Ltd.- 2007 (6) S.T.R. 3 (S.C.) held that in respect of offshore services, there should be sufficient nexus between the rendition of services and territorial limits of India. It was held that applying the principle of apportionment to composite transactions which have some operation in one territory and same in other, it is essential to determine taxability of the service operations. Applying this principle, we find that in the present case the whole of service rendered and consumed outside India is beyond

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the taxable territory as per Finance Act, 1994, hence not liable to service tax.

16. In the present case, the department and both the adjudicating authority nowhere disputed the facts that the services rendered by Appellant to ESML were provided and consumed at a place outside India and therefore, not leviable to Service tax, as the services was provided beyond the territorial jurisdiction of India. Thus, we are of the view that in the instant case, the amount deposited by the appellants without any authority of law cannot be considered as Service Tax. Therefore, the appellant are entitled to get the refund and we hold the same."

7. Thus, so far as the territorial jurisdiction is concerned, in wake

of the fact that the appellant has provided services outside India, and

which is not disputed, and his claim on service being outside taxable

territory of India, coupled with the fact that the transaction in

question was outside taxable territory of India, no substantial

question of law worth the name emanates from the present Tax

Appeal.

Hence, the present Tax Appeal stands rejected.

(A. S. SUPEHIA, J)

(PRANAV TRIVEDI,J) phalguni/9