Refund of IGST on ocean freight: appellate limitation observations set aside; refund to be processed with interest.

Refund claims for IGST paid on ocean freight under the reverse charge mechanism were contested on limitation and admissibility grounds; the appellate orders directions to verify limitation were unnecessary and the adjudicating order was quashed for failure to afford opportunity of hearing. The impugned administrative order was set aside and the adjudicating authority was directed to process the refund application filed in the prescribed form for the relevant period and to pay consequential interest at the specified rate. The writ challenge succeeded because procedural fairness was not observed and limitation observations by the appellate authority were inappropriate.

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Issues: Whether the appellate authority erred in directing the adjudicating authority to verify the admissibility of the petitioners refund claim with reference to period of limitation and remanding the matter instead of directing disposal, and whether the petitioner is entitled to quashing of the impugned appellate order and direction to the respondents to process the refund claim of IGST paid on ocean freight under Entry 10 of the Notification No.10/2017-IGST.

Analysis: The Court examined the legal framework governing refund of IGST paid on ocean freight under Entry 10 of Notification No.10/2017-IGST and the statutory procedure for refund under Section 54 of the CGST Act, 2017. The Court considered precedents addressing refund claims made pursuant to declarations of invalidity of notifications (including Mohit Minerals and subsequent Gujarat High Court decisions) and principles governing limitation where payment is made under a mistake of law, including application of Section 17 of the Limitation Act, 1963. The appellate orders paragraph directing verification of limitation and remanding for further adjudication was compared with earlier decisions which require that once the notification has been declared ultra vires, authorities should process refund claims without raising technical or limitation objections, and where administrative orders inconsistent with those principles should be quashed. The Court also noted the absence of a genuine hearing opportunity to the petitioner as alleged, and found the appellate authoritys observation on limitation to be unnecessary and contrary to settled precedents requiring processing of such refund claims.

Conclusion: The writ petition is allowed; the appellate order dated 30.10.2023 is quashed and set aside to the extent it directed verification of limitation and remand. The respondents are directed to process the petitioners refund claim in Form RFD-01 through the online portal for the relevant period and to grant consequential interest at 6% per annum.

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