No GST leviable on Ocean Freight- Rajasthan High Court

Brief Facts:

The Petitioner has filed the petition under Article 226 of the Constitution of India seeking the following reliefs:

(a) To issue appropriate writ/order/direction to the effect declaring Sr. No. 9(ii) of the Notification No. 8/2017- Integrated Tax (Rate) dated 28.06.2017 to be an unconstitutional and ultra-vires to the provisions of the IGST Act, 2017 to the extent it prescribe rate for levy of IGST on services by way of transportation of goods by vessel from a place outside India, up to custom station of clearance of India, where service provider and service recipient both are located in non-taxable territory i.e. Outside India;

(b) To issue appropriate writ/ order/ direction to the effect declaring the Sr. No. 10 of the Notification No. 10/2017- Integrated tax (Rate) dated 28.06.2017 to be unconstitutional, ultra-vires and de-hors to the provisions of the Section 5(3) of the IGST Act, 2017 read with Section 2(93) of the CGST Act, 2017 to the extent it deems ‘importer’ within meaning of Section 2(26) of the Custom Act, 1962 as ‘recipient’ of service.

Submission by petitioner:

• The Learned counsel for the petitioner submitted that the said reliefs as claimed by the petitioner are covered by the decision given by the Gujarat High Court in the case of Mohit Minerals Private Limited vs. Union of India and Ors. (R/Special Civil Application No. 726 of 2018) decided on 23.01.2020. It was held by the Hon’ble High Court that:

“The impugned Notification No. 8/2017- Integrated Tax (Rate) and the Entry 10 of the Notification No. 10/2017- Integrated Tax (Rate) are declared as ultra vires the IGST Act, 2017, as they lack legislative competency. Both the Notifications are hereby declared to be unconstitutional.”

• The counsel for the petitioner further submitted that in view of the decision given by the Gujarat High Court in the case of M/s COMSOL Energy Private Limited vs. State of Gujarat (R/Special Civil Application No. 11905 of 2020) decided on 21.12.2020, the petitioner is also entitled for refund of IGST paid by him. It was held by the Hon’ble High Court that:

“Similarly, this court, in the case of Bharat Oman Refineries Ltd. vs. Union of India (Special Civil Application No. 8881 of 2020, decided on 18.08.2020) directed the respondent to sanction the refund of the IGST paid by the assessee pursuant to the Entry No. 10 of the Notification No. 10/2017- Integrated Tax (Rate) dated 28.06.2017 declared to be ultra vires in the case of Mohit Minerals Pvt. Ltd. (supra).”

High Court Ruling:

In view of the above rulings, this writ application succeeds and is hereby allowed. The deficiency memo issued in the prescribed form RFD-03 are hereby quashed and set aside. The respondent is directed to process the refund claim filed in the prescribed form RFD-01 online portal for the month of February and March 2018 for an amount of Rs. 93.54 lakhs along with simple interest @ 6% per annum.

Keeping in view the submissions made by the learned counsel for the parties, this petition is disposed of in terms of the decisions given by the Gujarat High Court in Mohit Minerals Private Limited (supra) & M/s COMSOL Energy Private Limited (supra).