M/S Louis Dreyfus Company INDIA Private Limited vs. Union Of INDIA
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The petitioner, M/s Louis Dreyfus Company India Private Limited, engaged in processing edible oils and coffee, filed a Special Civil Application seeking a direction to the respondents to refund Integrated Goods and Services Tax (IGST) collected on ocean freight charges, along with interest. The petitioner also sought to prohibit the respondent authorities from collecting IGST based on Notification No. 10 of 2017 and Notification No. 8 of 2017, both dated June 28, 2017, read with a corrigendum dated June 30, 2017. These notifications levied IGST on inter-state supply of services involving transportation of goods by vessel and on services by persons in non-taxable territories by way of transportation of goods by vessel from outside India up to the Indian customs clearance station, with the latter being payable on a reverse charge basis by the importer, and later at 10% of the CIF value.
Held
The Court held that Notification No. 8 of 2017 and Notification No. 10 of 2017, dated 28.6.2017, read with the corrigendum dated 30.6.2017, were unconstitutional and ultra vires the statute. This finding was based on the established precedent set by the High Court in Mohit Minerals Pvt. Ltd. vs. Union of India, which was followed in subsequent cases like Gokul Agro Resources Ltd. vs. UOI and Bharat Oman Refineries Ltd. vs. Union of India. The Court noted that this legal position could not be disputed by the respondents. Furthermore, the Court referred to a coordinate bench's decision in ADI Enterprises vs. Union of India, which directed the refund of IGST paid pursuant to Entry No. 10 of Notification No. 10 of 2017, following the Apex Court's dismissal of appeals against such orders. The ratio decidendi is that notifications declared ultra vires the parent Act cannot be enforced, and taxes collected thereunder must be refunded. The Court directed the refund of any IGST collected under these notifications within six weeks, along with statutory interest.
Key Issues
1. Whether Notification No. 8 of 2017 and Notification No. 10 of 2017, dated 28.6.2017, along with the corrigendum dated 30.6.2017, are ultra vires the provisions of the Integrated Goods and Services Tax Act, 2017, and thus unconstitutional? Petitioner's contention: The petitioner argued that these notifications were unconstitutional and ultra vires the statute, relying on the High Court's decision in Mohit Minerals Pvt. Ltd. vs. Union of India and subsequent judgments that followed it. They sought a refund of IGST paid under these notifications and a prohibition on future collection. Revenue/State's contention: The judgment records that the learned advocates for the respective parties could not dispute the position and law emanating from the decision in Mohit Minerals Pvt. Ltd. (supra). Therefore, no specific argument against the petitioner's claim was recorded for the revenue/state.
Sections Cited
Notification No. 10 of 2017, Notification No. 8 of 2017
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
ORAL ORDER (PER : HONOURABLE MR. JUSTICE N.V.ANJARIA) Heard learned advocate Mr. Kishore Kunal with learned advocate Mr. Parth Contractor for the petitioner and learned advocate Mr. Nikunt Raval for the respondent No.3. 2. The petitioner-private limited company engaged in the business of processing of edible oils and coffee etc. has by filling the present Special Civil Application prayed to direct the respondents to refund the Integrated Goods and Services Tax (hereinafter referred to as “IGST”) calculated on the amount of ocean freight charges with interest. It was further prayed to prohibit the respondent authorities from collecting the IGST in terms of Notification No. 10 of 2017 - Integrated Tax (Rate) dated 28.6.2017 and Notification No. 8 of 2017 – Integrated Tax (Rate) of even date read with corrigendum dated 30.6.2017. 3. With the commencement of levy of Goods and Services Tax under the law with effect from 1.7.2017, the Notification No. 8 of 2017 dated 28.6.2017 provided that the IGST at the rate of 5% shall be levied on inter-state supply of services when the goods are transported in a vessel etc.. Another Notification No. 10 of 2017 dated 28.6.2017 came to be C/SCA/11540/2021 ORDER DATED: 07/07/2022 issued notifying that in respect of services supplied by a person located in the non-taxable territory by way of transportation of goods by vessel from a place outside India upto the Custom Clearance Station in India, the entire IGST shall be paid on the reverse charge basis by the importer. The corrigendum dated 30.6.2017 was issued. It was provided therein that in the circumstances mentioned therein, the IGST shall be collected at the rate of 10% of the CIF value. 4. followed in Gokul Agro Resources Ltd. vs. UOI [2020 (35) GSTL 82 (Guj.)], Bharat Oman Refineries Ltd. vs. Union of India [2020 (41) GSTL 292 (Guj.)] and in Comsol Energy Private Limited vs. State of Gujarat [TS-1241-HS(GUJ)-2020-GST].
The above position and law emanating from the decision of this court in Mohit Minerals Pvt. Ltd. (supra) could not be disputed by learned advocates for the respective parties. It may also be mentioned that similar issue came up for consideration before the co-ordinate Bench in court recorded thus in para 3, C/SCA/11540/2021 ORDER DATED: 07/07/2022 “Learned advocate appearing for the applicant would submit that the reason for filing the present application is that vires of Entry No.10 of Notification No.10/2017- IGST (Rate) dated 28.6.2017 issued under the Integrated Goods and Services Tax Act, 2017 was challenged by the applicant by way of captioned writ petition along with other identical writ petitions. The Division Bench of this Court vide judgment and order dated 23.1.2020 passed in the captioned writ petition along with other writ petitions allowed the writ petitions and declared Entry No.10 of Notification No.10/2017- IGST (Rate) dated 28.6.2017 as ultra vires the Act. He would further submit that during the pendency of the present application, Civil Appeal No.1390 of 2022 and allied appeals preferred at the instance of the respondents also came to be dismissed by judgment and order dated 19.5.2022 passed by Hon'ble Apex Court.
1 The court thereafter directed in para 4 as under, “In view of the above, we are of the opinion that the present application requires consideration and hence, the same is allowed in terms of prayer 6 (a). The respondents are hereby directed to grant refund of the amount of IGST already paid by the applicants pursuant to the Entry No.10 of Notification No.10/2017-IGST (Rate) dated 28.6.2017 along with statutory rate of interest on such refund within a period of four weeks from the date of submission of necessary documents by the applicants.”
In view of the decision in Mohit Minerals Pvt. Ltd. (supra), since the impugned Notifications have already been declared as ultra vires, present petition deserves to be allowed.
Accordingly, the petition is allowed in terms of para Nos. 13(A) and 13(B). It is directed that if any IGST amount is collected, the same shall be refunded within six weeks alongwith statutory rate of interest. (N.V.ANJARIA, J) (BHARGAV D. KARIA, J) C.M. JOSHI
Reproduced from the public record of the Gujarat High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.