Ultra vires GST levy on ocean freight: refund follows automatically, and rectification rejection cannot defeat substantive relief.

GST collected on ocean freight services could not be retained once the levy was treated as ultra vires sections 8 of the CGST Act and 5(3) of the IGST Act. On that basis, refund was held to follow as a necessary consequence of the invalid levy, and the respondents were bound to return the amount collected. Rejection of the rectification application under section 161 on the ground that an appellate remedy was available did not bar relief where the substantive levy itself had already been invalidated. The question of interest was left open.

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Issues: Whether the petitioner was entitled to refund of GST collected on ocean freight services after the levy was held ultra vires, and whether the rectification application under section 161 could be rejected on the ground of availability of an appellate remedy.

Analysis: The levy on ocean freight services had already been struck down, and the Court proceeded on the basis that the notification and entry imposing such levy were ultra vires section 8 of the Central Goods and Services Tax Act, 2017 and section 5(3) of the Integrated Goods and Services Tax Act, 2017. In that situation, the collection of GST on ocean freight could not be sustained, and the respondents were bound to grant refund. The rejection of the rectification application on the ground that the GST Appellate Tribunal was the proper remedy did not defeat relief where the substantive levy itself had already been invalidated.

Conclusion: The petitioner was entitled to refund of the amount collected, with the question of interest left open.

Final Conclusion: The writ petition was disposed of by directing refund on the basis that GST on ocean freight services was not leviable.

Ratio Decidendi: Once the levy itself is declared ultra vires, the amount collected under that levy cannot be retained and refund follows as a necessary consequence.

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