Gujarat High Court Directs CBIC To Refund IGST On Ocean Freight

The division bench of Justice N.V. Anjaria and Justice Bhargav D. Karia has relied on the decision of the Supreme Court in the case of Mohit Minerals Pvt. Ltd. vs. Union of India in which GST on ocean freight was struck down.

The Gujarat High Court, in response to a writ case filed by Mohit Minerals Private Limited, ruled that the announcements placing the tax under the reverse charge process are unconstitutional. The Supreme Court overturned the importer's requirement to pay tax under the reverse charge method.

The petitioner is a private limited company engaged in the business of processing edible oils and coffee, etc. The petitioner sought directions to the department/respondents to refund the IGST calculated on the amount of ocean freight charges with interest. The petitioner further sought the directions to prohibit the respondent authorities from collecting the IGST in terms of Notification No. 10 of 2017—Integrated Tax (Rate) dated 28.6.2017 and Notification No. 8 of 2017—Integrated Tax (Rate) of even date read with a corrigendum dated 30.6.2017.

Notification No. 8 of 2017 dated 28.6.2017 provided that the IGST at the rate of 5% shall be levied on inter-state supplies of services when the goods are transported in a vessel, etc., with the commencement of the levy of GST. Another Notification No. 10 of 2017 dated 28.6.2017 was issued notifying that in respect of services supplied by a person located in the non-taxable territory by way of transportation of goods by vessel from a place outside India upto the Custom Clearance Station in India, the entire IGST shall be paid on the reverse charge basis by the importer. A corrigendum dated 30.6.2017 was issued. The IGST was set to be collected at a rate of 10% of the cost, insurance, and freight (CIF) value.

The petitioner contended that the Notification Nos. 8 of 2017 and 10 of 2017, both dated 28.6.2017 and read with a corrigendum dated 30.6.2017, came up for consideration for their validity before the Gujarat High Court. The court in Mohit Minerals Pvt. Ltd. vs. Union of India held the notifications to be unconstitutional and ultra vires the statute.

The Court allowed the petition as the notifications had already been declared as ultra vires.

Case Title: M/s Louis Dreyfus Company India Private Limited Versus Union Of India

Citation: 2022 LiveLaw (Guj) 314

Citation: R/SCA No. 11540 of 2021

Dated: 07/07/2022

Counsel For Petitioner: Advocate Parth Contractor

Counsel For Respondent: Advocates Devang Vyas, Nikunt K.Raval

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