High Court Invalidates Tax on Ocean Freight under GST Act

The High Court declared impugned Notifications under the Integrated Goods and Services Tax Act, 2017, regarding tax on ocean freight for transporting goods to India from a non-taxable territory, as ultra vires and unconstitutional. The court ruled that no tax is leviable on such ocean freight services. The court granted the relief sought by the petitioner, quashing the Notifications and issuing directions for records placement. Interim reliefs were also provided, including staying the tax levy during the petition's pendency. The court's decision was based on a previous case, providing relief to the petitioner and invalidating the impugned Notifications.

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Issues involved:
Challenge to impugned Notifications under Integrated Goods and Services Tax Act, 2017 regarding levy of tax on ocean freight for transportation of goods by vessel from non-taxable territory to India.

Analysis:
The petitioner, an import company, filed a writ-application challenging the impugned Notifications under Article 226 of the Constitution of India. The relief sought included quashing the Notifications and declaring them ultra vires to the Integrated Goods and Services Tax Act, 2017, and hence, unconstitutional. The petitioner also requested the court to issue directions for placing records of recommendations and decisions related to the Notifications. Additionally, interim reliefs were sought, including staying the operation of the Notifications and the levy and collection of tax on ocean freight during the pendency of the petition.

The High Court, in its judgment, referred to a previous case and concluded that no tax is leviable under the Integrated Goods and Services Tax Act on ocean freight for services provided by a person in a non-taxable territory for transporting goods by vessel to India. The court held that the levy and collection of tax on such ocean freight under the impugned Notifications were not permissible in law. Consequently, the impugned Notifications were declared ultra vires the Integrated Goods and Services Tax Act, 2017, due to lack of legislative competency, and were deemed unconstitutional. The court disposed of the writ-application based on the precedent set in the mentioned case, thereby providing relief to the petitioner and declaring the impugned Notifications invalid.

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