Importers Win Major Tax Relief: IGST on Ocean Freight Deemed Unconstitutional, Full Refund Ordered with Interest

HC ruled that IGST levy on ocean freight was unconstitutional. The petitioner, an importer, paid Rs. 6,98,00,420/- in IGST on ocean freight from June 2017 to December 2019. The court directed respondents to refund the entire amount with statutory interest within six weeks, following previous judicial precedents declaring similar notifications ultra vires.

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Issues:
The issues involved in the judgment are the levy of IGST on ocean freight and the refund of the IGST amount paid by the petitioner.

Levy of IGST on Ocean Freight:
The petitioner sought a declaration that the levy of IGST on ocean freight paid by them was unconstitutional and ultra vires of the IGST Act, 2017. The notifications in question prescribed rates of IGST for transportation of goods by vessel from a place outside India up to the customs station of clearance in India. The petitioner, as an importer, paid IGST on ocean freight under the reverse charge basis. The liability of tax was imposed on the petitioner importer due to deeming provisions in the notifications. The petitioner paid IGST amounting to Rs. 6,98,00,420/- on ocean freight during the period from June, 2017 to December, 2019. The court referred to previous decisions holding similar notifications as unconstitutional and ultra vires.

Refund of IGST Amount:
The court noted that previous decisions had declared the impugned notifications as ultra vires. Therefore, the prayer regarding the levy of IGST did not require further consideration. Regarding the refund of the IGST amount paid by the petitioner, the court directed the competent authority of the respondents to refund the amount of Rs. 6,98,00,420/- within six weeks from the date of the order, along with the statutory rate of interest. The petition was allowed and disposed of accordingly.

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