Gujarat High Court
Shah Foils Limited vs Union Of India on 3 October, 2025
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
NEUTRAL CITATION
C/SCA/4857/2019 JUDGMENT DATED: 03/10/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 4857 of 2019
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR. JUSTICE PRANAV TRIVEDI
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Approved for Reporting Yes No
No
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SHAH FOILS LIMITED
Versus
UNION OF INDIA & ORS.
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Appearance:
MR ANAND NAINAWATI(5970) for the Petitioner(s) No. 1
ADVOCATE NOTICE UNSERVED for the Respondent(s) No. 1
NOTICE SERVED BY DS for the Respondent(s) No. 2
PARAM V SHAH(9473) for the Respondent(s) No. 3
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CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR. JUSTICE PRANAV TRIVEDI
Date : 03/10/2025
ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)
1. Heard learned advocate Mr.Anand Nainawati
for the petitioner and learned advocate
Mr.Param V. Shah for the respondent No.3.
2. Rule, returnable forthwith. Learned
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advocate Mr.Param Shah waives service of
notice of rule for and on behalf of the
respondent No.3.
3. By this petition under Article 226 of the
Constitution of India, the petitioner has
prayed for the following reliefs :
"(a) Issue an appropriate writ,
declaring Rule 10 of the Place of
Provision of Service Rules, 2012 and
Rule 2(1)(d)(EEC) of the Service Tax
Rules, 1994 to be unconstitutional and
ultra vires the provisions of the 1994
Act;
(b) Issue an appropriate writ, striking
down Section 66B of the Finance Act,
1994 read with Rule 10 of the Provision
of Service Rules, 2012 in so far as it
imposes the levy of service tax on the
services by way of transportation of
goods by a vessel from a place outside
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India up to the customs station of
clearance in India, where the service
provider and the service recipient is
located outside India;
(c) Issue an appropriate writ, declaring
Rule 8B of the Point of Taxation Rules,
1994 to be unconstitutional and ultra
vires the 1994 Act;
(d) Issue a writ of mandamus or a writ
in the nature of mandamus, or any other
appropriate writ, order or direction,
under Article 226 of the Constitution of
India declaring paras 4 & 4.1 of the TRU
Circular No.206/4/2017-ST dated
13.04.2017 to be contrary to law;
(e) Issue a writ of mandamus or a writ
in the nature of mandamus, or any other
appropriate writ, order or direction,
under Article 226 of the Constitution of
India, restraining to the Respondents
from levying service tax on the services
by way of transportation of goods by a
vessel from a place outside India up to
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the customs station of clearance in
India;
(f) Issue any other writ, order or
direction as this Hon'ble Court may deem
just and fair and circumstances of the
case;
(g) For such further and other reliefs
as the nature and circumstances of the
case may require."
4.1. The brief facts of the case are that
the petitioner was subjected to pay service
tax for the services availed on ocean freight
as per the Notification No.15/2017.
4.2. This Court by judgment and order dated
23rd January, 2020 in case of Mohit Minerals
Pvt. Ltd. Versus Union of India and Others
(Special Civil Application No.726 of 2018)
held the Notification No.8/2017-Integrated Tax
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(Rate) dated 28.06.2017 and the Entry No.10 of
the Notification No.10/2017-Integrated Tax of
the same date as ultra vires the provisions of
the Integrated Goods and Services Tax Act,
2017 (for short 'the IGST Act') on the ground
that both the Notification and the Entry lack
legislative competency. The decision of this
Court is also upheld by the Hon'ble Supreme
Court.
4.3. In the case of M/s.Sal Steel Ltd. &
Anr. Versus Union of India & Ors. reported in
2019 SCC Online Guj 3706, this Court passed
the following order :
"58. In view of the aforesaid
discussion, the writ application
succeeds and is hereby allowed. The
Notification Nos.15/2017-ST and 16/2017-
ST making Rule 2(1)(d)(EEC) and Rule
6(7CA) of the Service Tax Rules and
inserting Explanation-V to reverse
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charge Notification No.30/2012-ST is
struck down as ultra vires Sections 64,
66B, 67 and 94 of the Finance Act, 1994;
and consequently the proceedings
initiated against the writ applicants by
way of show cause notice and enquiries
for collecting service tax from them as
importers on sea transportation service
in CIF contracts are hereby quashed and
set aside with all consequential reliefs
and benefits."
4.4. In the decision in case of Torrent
Power Ltd. Versus Union of India & Anr.
(Special Civil Application No.2748 of 2022)
rendered on 25th April, 2022 following the
decision in case of M/s.Sal Steel Ltd (Supra),
this Court has held as under :
"4. The petitioner, therefore, applied
for refund on the basis of the order
passed by this Court before the
respondent - authority. However, the
respondent - authority by order dated
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03.01.2022 rejected the claim of the
petitioner by observing as under
"29. As the service tax have been
declared unconstitutional and the
refund have been claimed under
section 83 of Finance Act, 1994, the
issue is whether the Central Excise
Office has power to sanction the
refund of the taxed which have been
declared as unconstitutional. In this
connection I find that Supreme court
in case of Mafatlal Industries Ltd.
vs. Union of India -
1997(89)ELT247(SC) has pronounced
that such refunds are out of the
preview of Section 11B of the Central
Excise Act, 1944 and only way to get
the refund of such amount is to file
Writ Petition or Civil Suit and the
said Judgment have been relied upon
by the CESTAT in many cases. In one
such case, CESTAT Mumbai in the case
of Casa Grande Co-Operative Housing
Vs. Commissioner of CGST (CESTAT
Mumbai) in Appeal No.ST/86347/2018
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has held that when any provision in
the statute has been held to be
unconstitutional, refund of tax under
such statute will be outside the
scope and purview of such enactment
and under such circumstances, refund
can be claimed by way of a suit or by
way of writ petition."
5. The judgment delivered by this Court
is binding upon the sub-ordinate
authority, more particularly, when the
same is not stayed by the higher
authority inspite of the fact that the
judgment of this Court is pending
before the Apex Court for adjudication.
6. In view of the above reasons, this
petition is allowed. The respondents
are directed to pay service tax already
paid by the pursuant to the
Notification 15/2017, which is declared
ultra vires as observed in case of Sai
Steel Ltd. (supra). The respondent to
refund the service tax at the earliest
and not later 12 weeks from the date of
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receipt of this order along with
interest as per the law. Rule is made
absolute. No order as to costs."
4.5. By following the aforesaid decision,
in Special Civil Application Nos.17804 of 2017
and 11626 of 2018 in case of Kandla Port
Steamship Agents Association Versus Union of
India & Ors., this Court on 12.06.2024
directed the respondents to refund the service
tax already paid by the petitioner pursuant to
the Notification No.15/2017 which was held to
be ultra vires in case of M/s.Sal Steel Ltd
(Supra).
5. Learned advocate Mr.Anand Nainawati for
the petitioner and learned advocate Mr.Param
Shah for the respondent jointly submitted that
the facts of the case are identical with that
of the M/s.Sal Steel Ltd (Supra) and Kandla
Port Steamship Agents Association (Supra) and
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in view of the decision of this Court striking
down the Notification No.15/2017 for levy of
the service tax on the services by way of
transportation of good by a vessel from a
place outside India up to the customs station
of clearance in India, where the service
provider and the service recipient located
outside India was held to be ultra vires and
therefore it was submitted that the petition
may be allowed by directing the respondents to
refund the amount of service tax already paid
by the petitioner pursuant to the Notification
No.15/2017.
6. Considering such submissions and in view
of the decisions extracted hereinabove, the
petition is allowed and the respondents are
directed to refund the service tax, if any,
already paid by the petitioner pursuant to the
Notification No.15/2017 after verification of
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the details which may be submitted by the
petitioner. Rule is made absolute to the
aforesaid extent. No orders as to cost.
(BHARGAV D. KARIA, J)
(PRANAV TRIVEDI,J)
PALAK
