TaxTMI 
TaxTMI 
2025 (10) TMI 1027
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.... (b) that this Hon'ble Court be pleased to issue a writ of Mandamus or a writ in the nature of Mandamus or any other writ or order or direction under Article 226 of the Constitution of India ordering and directing the Respondents by themselves and/or their officers and/or subordinates to forthwith grant and sanction interest of Rs. 71,31,225/- to the Petitioner." 2. Rule. Rule is made returnable forthwith by the consent of the parties. We have heard Mr. Sanghavi for the Petitioner and Mr. Mishra for the respondents and with their assistance we have perused the record. Factual matrix 3. The facts, in brief, necessary for adjudicating this Petition are set out below:- 4. The Petitioner is a company incorporated under the Companies Act, 1956, engaged in the import of palm oil (crude and refined) for trading in India. 5. The Petitioner was fastened with the liability to pay Integrated Goods and Services Tax ("IGST") on reverse charge basis in terms of notification No. 8 of 2017-Integrated Tax (Rate) read with notification No. 10/2017-Integrated Tax (Rate) and corrigendum dated 30 June 2017 to the said notification No. 8 of 2017 by the respondents. The petitioner....
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....023 that the Petitioner filed a detailed reply to the show cause notice (supra) to mainly contend that Section 54 of the CGST Act was not applicable in the given facts. The Petitioner in such reply also relied on certain judicial decisions to contend that Section 54 of the CGST Act is applicable only to claim refund of any tax paid under the provisions of the CGST Act. According to the Petitioner the amount collected by the revenue from the Petitioner on reverse charge mechanism on ocean freight cannot be considered as tax and therefore Section 54 of the CGST Act would thus not be applicable. 14. By Order dated 31 January 2023 the Respondent No. 2 issued in FORM GST RFD-06 ("Impugned Order") sanctioned refund of Rs. 2,62,37,558/- in favour of the Petitioner and rejected the claim of the Petitioner towards interest amounting to Rs. 71,31,225/-, in light of the reasons recorded in the said order. 15. Being aggrieved by the Impugned Order (supra) the Petitioner has approached this Court by way of the Writ Petition. 16. In the above factual backdrop, we are now called upon to adjudicate whether the claim of the Petitioner towards interest of Rs. 71,31,225/- rejected by the res....
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....t to the Petitioner from the date of deposit of the said amount of Rs. 2,62,37,558/- by the Petitioner. 20. Mr. Sanghavi would then place reliance on Article 265 of the Constitution of India, to submit that in the given case, the amount of IGST on ocean freight illegally retained by the respondents, violates Article 265 of the Constitution of India. The respondents were therefore obligated to refund the said amount along with interest from the date of the amount being deposited by the Petitioner. The impugned action of the respondents rejecting the Petitioner's claim of interest is contrary to the constitutional mandate under Article 265 of the Constitution of India. 21. Mr. Sanghavi referring to the Impugned Order would submit that the Respondent No. 2 has grossly erred in rejecting the Petitioner's genuine and legal claim of interest by erroneously holding that the period of 60 days has not expired from the date of filing of refund application. On such ground the Petitioner's claim of interest was rejected by the respondents by referring to Sections 54 read with 56 of the CGST Act. In this regard, according to Mr. Sanghavi, Section 54 of the Act was applicable only for clai....
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....t of any interest as erroneously claimed by the Petitioner. For such reason he would strongly support such reasoning in the impugned order to reject the interest claimed by the Petitioner, in the given facts. 26. Mr. Mishra by placing reliance on the affidavit in reply of the respondents has submitted that the refund processing by tax officers has been made online and disbursal through a single authority w.e.f. 26 September 2019. Accordingly, the Petitioner was directed to file a refund application online on the GST portal. In fact, the Petitioner filed the refund application on GST portal on 6 January 2023 and the IGST was refunded within 60 days of such application by the Petitioner. Therefore, the Petitioner's claim of interest of Rs. 71,31,225/- under Section 54 read with Section 56 of the Act is inadmissible and illegal. 27. Mr. Mishra would thus submit that the Petition is devoid of merit and ought to be dismissed with costs. 28. Mr. Sanghavi in the rejoinder has reiterated the submissions made by him as noted above. In response to Mr. Mishra's submission and reliance specifically to paragraph (iii) of the Impugned Order in regard to refunding the IGST amount to the ....
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.... notification dated 30 June 2017, to the extent these seek to impose IGST on the impugned transaction to be unconstitutional. Petitions disposed." The above decision of this court duly considers and follows the judgment of the Supreme Court in Mohit Minerals Pvt. Ltd. (supra). Here, the Supreme Court had the occasion to consider the issue as to whether an Indian importer can be subject to the levy of the IGST on the component of ocean freight paid by the foreign seller to a foreign shipping line, on a reversed charge basis. The constitutional validity of the said Notifications i.e. 8 of 2017 and 10 of 2017 (supra) being ultra vires the IGST and CGST Act, were challenged by the Union of India in the said case before the Supreme Court in SLP where decision of the Gujarat High Court was assailed. 32. The Supreme Court in its judgment on considering the rival contentions and the legal framework dismissed the Appeal of Union of India. It held thus:- "(iii) The IGST Act and the CGST Act define reverse charge and prescribe the entity that is to be taxed for these purposes. The specification of the recipient - in this case the importer - by Notification No. 10/2017 is only c....
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....ly of goods and supply of services of transportation, insurance etc. in a CIF contract, a separate levy on the Indian importer for supply of services by the shipping line would be violative of Section 8 of the GST Act. Thus, the stand taken by the Petitioner in the given factual matrix, also aligns with the said decision. 35. Mr. Mishra, learned counsel for the revenue has strongly supported the impugned order to submit that there is no illegality, much less irregularity therein so as to warrant any interference. He would in support of his submissions refer to paragraph (iii) of the Impugned Order. This is to contend that as the refund claim of IGST Rs. 2,62,37,558/- was sanctioned/paid by the respondents within the statutory period of 60 days, the issue of payment of interest on such amount does not arise. In this context such submission of Mr. Mishra does not assist the case of the revenue. Such is for the reason that as noted above, the said amount of IGST collected from the Petitioner by the respondents, which is now refunded, is not payable at all in law. This is because such tax based on the said Notifications were struck down by the Supreme Court in Mohit Minerals Pvt Ltd....
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.... paid in accordance with and under the framework of the CGST Act and its extant provisions. The said Section would not apply in a situation where revenue or the respondents have no authority to collect the IGST paid by the Petitioner on reverse charge mechanism on the ocean freight, from the date of payment to the date of refund. This would further be in the teeth of the order of this Court dated 10 August 2022 in Writ Petition No. 8318 of 2019 (supra) where a coordinate Bench of this Court has in terms struck down notification No. 8 of 2017 read with the corrigendum dated 30 June 2017 to the extent they seek to impose IGST, to be unconstitutional. This Court directed that wherever the refund is payable, the same shall be paid within 8 weeks with applicable interest, in accordance with law. Thus, it is incumbent on the respondents to pay interest to the Petitioner on the IGST of Rs Rs. 2,62,37,558/- paid under reverse charge mechanism on ocean freight, in the given facts and circumstances. 38. At this juncture, we find merit in the submission of Mr. Sanghavi who would urge that the stand of the respondents in the impugned order to the effect that the judgment of the Gujarat High....