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

HC ruled in favor of petitioner challenging IGST notifications under Integrated Goods and Services Tax Act, 2017. Court directed refund of INR 114.00 Lakhs IGST and INR 6.29 Lakhs interest, aligning with SC precedent. Notifications were declared ultra vires, emphasizing principles of composite supply and contravention of tax levy provisions. Mandamus issued for Input Tax Credit and record examination.

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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.

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