2023 (12) TMI 233 - HC - GST

High Court Orders IGST Refund on Ocean Freight, Upholds Precedent and Directs Reconsideration of Claim Within 90 Days

ARS Energy Private Limited, Rep by its Deputy Director, N. Prabu Versus Additional Commissioner (Appeals), Deputy Commissioner of GST and Central Excise, Chennai

ARS Energy Private Limited, Rep by its Deputy Director, N. Prabu Versus Additional Commissioner (Appeals), Deputy Commissioner of GST and Central Excise, ... Issues involved: Challenge to imposition of IGST on Ocean Freight Charges under Reverse Charge Mechanism (RCM), rejection of refund application, applicability of limitation period for refund application.Impugned Order Challenge - IGST on Ocean Freight Charges:The petitioner challenged the imposition of IGST on Ocean Freight Charges by the respondent based on the Reverse Charge Mechanism (RCM). The petitioner argued that since the exporter normally includes the Ocean Freight Charges in the cost of goods exported, the imposition of IGST on Ocean Freight Charges for imported goods by the petitioner was unjust. The petitioner was charged IGST on Ocean Freight Charges for specific periods, and despite a previous application for refund being rejected, the petitioner sought reconsideration following the precedent set by the Hon'ble Apex Court in the Union of India vs. Mohit Minerals Pvt Ltd. case.Refund Application Rejection and Limitation Issue:The Department rejected the refund application citing non-acceptance of the petitioner's contention and limitation concerns. The Appellate Authority also upheld the rejection. The respondent contended that the rejection was based on both the petitioner's argument and the limitation aspect. However, a recent judgment by the Madras High Court clarified that the limitation period for refund applications under the Goods and Services Tax Act is directory, not mandatory. Delays in filing refund applications can be considered and condoned if valid reasons are provided.Judgment and Directions:The High Court held that the petitioner was entitled to a refund of the IGST paid on Ocean Freight Charges, following the precedent set by the Hon'ble Apex Court. The impugned order was set aside, and the matter was remitted back to the respondent for reconsideration. The respondent was directed to review the refund application in light of the legal principles established by the courts and provide a personal hearing to the petitioner. Both parties were given the opportunity to raise additional issues, and the respondent was instructed to consider all issues on their merits within three months from the date of the order. The writ petition was disposed of with no costs incurred.