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Gujarat High Court

Selan Exploration Technology Limited vs Assistant Commissioner Of Goods And ... on 22 February, 2021

Author: J.B.Pardiwala

Bench: J.B.Pardiwala, Ilesh J. Vora

         C/SCA/3756/2021                                             ORDER




          IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

            R/SPECIAL CIVIL APPLICATION NO. 3756 of 2021

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          SELAN EXPLORATION TECHNOLOGY LIMITED
                          Versus
ASSISTANT COMMISSIONER OF GOODS AND SERVICES TAX DIVISION
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Appearance:
NANAVATI & CO.(7105) for the Petitioner(s) No. 1
for the Respondent(s) No. 1,2,3
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 CORAM: HONOURABLE MR. JUSTICE J.B.PARDIWALA
        and
        HONOURABLE MR. JUSTICE ILESH J. VORA

                             Date : 22/02/2021

                      ORAL ORDER

(PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA)

1. We have heard Mr. Maulik Nanawati, the learned counsel appearing for the writ­applicant.

2. The subject matter of challenge in the present writ­application is to the order passed by the Assistant Commissioner, Central GST, Division Gandhinagar. Paragraphs­41 and 42 of the impugned order reads thus:­ "41. Therefore, I find that the expenses incurred towards 'Royalty' by the said service tax assessee were taxable under Section 65B(51) of the Act and were liable for payment of service tax. I find that there is a case for invoking the extended period of time of five years for demand and recovery of duty amounting to Rs.33,61,491/­, under the proviso to Section 73(1) of the Act along with interest under the provisions of Section 75 of the Act. By the act of not disclosing the fact of receiving services from the Government of Gujarat for use of natural resources and not paying the appropriate service tax on the services received by them @ 100% under the reverse charge mechanism, as envisaged at Sr. No.6 to Notfn. No.30/2012­ST dated 20.6.2012, the service tax assessee has rendered themselves liable for penal action, under the Page 1 of 3 Downloaded on : Tue Feb 23 05:27:05 IST 2021 C/SCA/3756/2021 ORDER provisions of Section 78(1) of the Act.

42. The provisions of the repealed Central Excise Act, 1944, the Central Excise Tariff Act, 1985 and the amendment of the Finance Act, 1994 have been saved vide Section 174(2) of the CGST Act, 2017 and therefore, the provisions of the said repealed/amended Acts and Rules made there under are enforced for the purpose of demand of duty, interest etc. and the imposition of penalty."

3. The operative order of the impugned order reads thus:­ ORDER (I) I order recovery of service tax of Rs.29,193/­ (Rupees Twenty Nine Thousand One Hundred Ninety Three Only) under the proviso to Section 73(1) of the Act from M/s. Selan Exploration Technology Ltd.

(II) I order recovery of service tax of Rs.33,61,491/­ (Rupees Thirty Three Lakhs Sixty One Thousand Four Hundred Ninety One Only) under the proviso to Section 73(1) of the Act from M/s. Selan Exploration Technology Ltd.

(III) I order recovery of interest from them under the provisions of Section 75 of the Finance Act on the demand at (I) and (II) above.

(IV) I impose a total penalty of Rs.33,90,604/­ [Rs.29,193 + Rs.33,61,491] (Rupees Thirty Three Lakhs Ninety Thousand Six Hundred Four Only) under the provisions of Section 78(1) of the Finance Act.

4. The principal argument of the learned counsel appearing for the writ­applicant is that the royalty is not a payment in respect of any taxable service. Section­6A of the Oilfields (Regulation and Development) Act, 1948 and Rule­14 of the Petroleum and Natural Gas Rules, 1959 provided for payment of royalty on petroleum. It is the case of the writ­applicant that it has been paying royalty to the Government in accordance with the provisions of the Act under Rules. It is argued that there is no element or provision of any service by the State in this respect and the levy of service tax is clearly ultra vires the Act, 1948.

5. Mr. Nanawati invited out attention to the fact that the identical issue is being considered by this Court in a batch of writ­applications being a Special Civil Application No.4603 of 2017 and Special Civil Application No.4606 of 2017. In these matters, the levy of service tax is under the Mines and Minerals (Development and Regulation) Act, 1957. It is pointed out that the matters have been admitted vide order dated 19th September 2018.

6. Let notice of Rule be issued to the respondents, returnable on 19/04/2021. Let there be an ad­interim order in terms of Para­6(b). The respondents be served directly through E­mail. A regular mode of direct service is also permitted.

To be heard along with the Special Civil Application No.4603 of 2017 and Special Civil Application No.4606 of 2017.

(J. B. PARDIWALA, J) (ILESH J. VORA,J) A. B. VAGHELA Page 3 of 3 Downloaded on : Tue Feb 23 05:27:05 IST 2021