2022 (6) TMI 768 - HC - GST

Ocean Freight Services from Foreign Territories Cannot Be Taxed Separately Under IGST Act When Already Part of Composite Supply

The HC dismissed appeals by revenue authorities challenging a single bench order that had followed the Gujarat HC's decision in Mohit Minerals. The case ... Levy of IGST - Ocean Freight - services provided by a person, located in a non-taxable territory, by way of transportation of goods on a vessel from a place outside India up to Customs station of clearance in India - HELD THAT:- On perusal of judgement of Hon’ble Supreme Court in UNION OF INDIA & ANR. VERSUS M/S MOHIT MINERALS PVT. LTD. THROUGH DIRECTOR [2022 (5) TMI 968 - SUPREME COURT], while agreeing with the view taken by the High Court in MOHIT MINERALS PVT LTD VERSUS UNION OF INDIA & 1 OTHER [2020 (1) TMI 974 - GUJARAT HIGH COURT], held to the extent that a tax on the supply of a service, which has already been included by the legislation as a tax on the composite supply of goods, cannot be allowed. Appeal dismissed. Issues:1. Appeal against the order in W.P. 11303(W) of 2019 regarding taxation on ocean freight under the Integrated Goods and Services Tax Act, 2007.2. Interpretation of the decision of the High Court of Gujarat in Special Civil Application 726 of 2018 regarding tax levied on transportation of goods on a vessel from a place outside India up to Customs station in India.3. Validity of the notification declared unconstitutional in the writ petition.4. Impact of the decision of the Hon'ble Supreme Court in Civil Appeal No.1390 of 2022 on the present case.5. Whether a tax on the supply of a service already included as a tax on the composite supply of goods can be levied.6. Justification for dismissing the appeals based on the Supreme Court's decision.Analysis:The High Court of Calcutta heard a batch of appeals analogously, with the main appeal being M.A.T. 151 of 2021, filed by the revenue against the order in W.P. 11303(W) of 2019. The Single Bench had allowed the writ petition, following the High Court of Gujarat's decision in Mohit Minerals Pvt. Ltd. case, which held that no tax is chargeable under the Integrated Goods and Services Tax Act, 2007, on ocean freight for services from a non-taxable territory to a Customs station in India. The impugned notification was also deemed unconstitutional in the writ petition. The appeals were deferred initially due to a pending Special Leave Petition before the Supreme Court challenging the Gujarat High Court decision. However, upon the Supreme Court's decision in Civil Appeal No.1390 of 2022 affirming the Gujarat High Court's ruling, the Calcutta High Court found no grounds to interfere with the Single Bench's order. The Supreme Court held that a tax on a service already included in a tax on the composite supply of goods cannot be imposed. Consequently, the appeals were dismissed, and no costs were awarded. The court directed the expeditious provision of a certified copy of the order upon application.