2022 (8) TMI 1045 - HC - GST

Challenge to IGST Notifications Succeeds: Petitioner Wins Refund of Tax Credits and Interest Under Composite Supply Principles

INDORAMA INDUSTRIES LIMITED Versus UNION OF INDIA, GOODS AND SERVICES TAX COUNCIL

HC ruled in favor of petitioner challenging IGST notifications under Integrated Goods and Services Tax Act, 2017. Court directed refund of INR 114.00 ... Refund claim - Ocean Freight - RCM - Constitutional Validity of N/N. 8/2017-Integrated Tax (Rate), dated 28-6-2017 and entry 10 of the Notification No.10/2017-Integrated Tax (Rate), dated 28-6- 2017 - whether the same lack legislative competency, ultra vires to the Integrated Goods and Services Tax Act, 2017 and hence unconstitutional? - services supplied by a person located in non-taxable territory to a person located in nontaxable territory by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India - importer under clause 2(26) of the Customs Act on services supplied by a person located in non-taxable territory to a person located in non-taxable territory by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India - HELD THAT:- The issue in question is no longer res integra in view of of the judgment in the case of UNION OF INDIA & ANR. VERSUS M/S MOHIT MINERALS PVT. LTD. THROUGH DIRECTOR [2022 (5) TMI 968 - SUPREME COURT] where it was held that The impugned levy imposed on the ‘service’ aspect of the transaction is in violation of the principle of ‘composite supply’ enshrined under Section 2(30) read with Section 8 of the CGST Act. Since, the Indian importer is liable to pay IGST on the ‘composite supply’, comprising of supply of goods and supply of services of transportation, insurance, etc. in a CIF contract, a separate levy on the Indian importer for the ‘supply of services’ by the shipping line would be in violation of Section 8 of the CGST Act. Since, the instant petition is squarely covered by the judgment rendered by the Hon’ble Supreme Court, the same is accordingly allowed and respondent No.1 is directed to refund the amount along with interest strictly in accordance with the judgment in M/s Mohit Minerals Pvt. Ltd.’s case as expeditiously as possible and in any event by 30.11.2022 - application disposed off. Issues:Challenge to the legislative competency of certain notifications under the Integrated Goods and Services Tax Act, 2017 and their constitutionality. Refund of IGST and interest deposited by the petitioner. Examination of recommendations and decisions related to impugned notifications. Input Tax Credit of IGST paid by the petitioner.Legislative Competency and Constitutionality:The petition sought the quashing of specific notifications under the Integrated Goods and Services Tax Act, 2017, alleging a lack of legislative competency and unconstitutionality. The court was asked to declare that the notifications were ultra vires to the Act. The judgment referred to the principle of composite supply and highlighted that the levy imposed on the service aspect of the transaction was in violation of this principle. It was emphasized that the Indian importer's liability to pay IGST on a composite supply, including services like transportation, meant that a separate levy on the importer for services by the shipping line would contravene the Act.Refund of IGST and Interest:The petitioner sought a refund of IGST and interest amounting to INR 114.00 Lakhs and INR 6.29 Lakhs, respectively, deposited under the impugned notifications. The court, considering the judgment of the Hon'ble Supreme Court in a related case, directed respondent No.1 to refund the amount along with interest by a specified date, aligning with the principles established in the Supreme Court's ruling.Examination of Recommendations and Decisions:Additionally, the petition requested a writ of mandamus/order/direction for respondent No.2 to present before the court the records of recommendations and decisions concerning the impugned notifications. This aspect aimed to shed light on the decision-making process and rationale behind the notifications in question.Input Tax Credit:In an alternative relief sought, the petitioner requested a writ of mandamus/order/direction to allow the Input Tax Credit of IGST paid under the notifications. This request was based on the petitioner's classification as an 'importer' under the Customs Act, emphasizing the transportation of goods by vessel from a non-taxable territory to a non-taxable territory.The judgment, recognizing the alignment of the instant petition with the Supreme Court's precedent, allowed the petition and directed the refund of the deposited amount and interest. The court emphasized the need for expeditious compliance with the refund directive, setting a deadline for the same. Any pending applications were also disposed of in light of the judgment's conclusion.