HC sets aside IGST reverse charge order for vessel transportation services, remands for fresh consideration following Supreme Court precedent

The HC set aside an order regarding non-payment of IGST under reverse charge mechanism for vessel transportation services from outside India to customs clearance stations. The original order dated 23.03.2022 was passed before the SC's judgment in Union of India v. Mohit Minerals Pvt. Ltd. (decided 19.05.2022). Since the respondent authority had no opportunity to consider the SC precedent, the HC remanded the matter for fresh consideration in light of the SC decision. The writ petition was allowed by way of remand.

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Issues:
1. Confirmation of demand under reverse charge mechanism for service of transportation of goods by vessel.
2. Consideration of conflicting judgments regarding taxability of tour operator services.
3. Interpretation of legal provisions for interest on delayed payment of tax.
4. Impact of subsequent Supreme Court judgment on the impugned order.

Analysis:
1. The petitioner challenged the Order-in-Original confirming the demand under reverse charge mechanism for transportation services by vessel. The respondent relied on the decision of the Gujarat High Court in Mohit Minerals case, which struck down certain notifications as unconstitutional. However, the respondent upheld the demand, citing separate taxation under different statutes for distinct taxable events, thereby rejecting the claim of double taxation.

2. The respondent considered conflicting judgments regarding taxability of tour operator services, including the Delhi High Court decision and observations of the Constitution Bench of the Supreme Court in Federation of Hotel & Restaurant Association of India case. The respondent emphasized the distinction between separate and distinct taxes under different statutes, concluding that no double taxation occurred in the present case.

3. Regarding interest on delayed payment of tax under reverse charge mechanism, the respondent referred to Section 50 of the CGST Act, emphasizing the liability of a person failing to pay tax within the prescribed period to pay interest. The respondent analyzed the legal provisions and found the interest proposed on non-payment of tax to be justified under the law.

4. The petitioner highlighted that the impugned order was issued before the Supreme Court pronounced its judgment in Union of India Vs. Mohit Minerals Private Limited case. Subsequently, the Supreme Court's judgment impacted the legal analysis of the case. The Court observed that the impugned order should be set aside and remitted back to the respondent for fresh consideration in light of the Supreme Court's decision. As a result, the Writ Petition was allowed by way of remand, directing the respondent to pass a fresh order within six weeks from the date of receipt of the order. No costs were awarded, and the connected writ miscellaneous petition was closed.

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