Rawmet Resources (P) LTD., Rep. By Its General Manager, Sanjay Kumar Behura. vs. Union Of INDIA, Rep. By The Secretary And 2 Ors.

Held

The Court held that the rule in the petition could be made absolute in terms of prayer clauses (a) and (b). This implies that the Court accepted the Petitioner's contention that the imposition of IGST on ocean freight, when IGST has already been paid on the full CIF value of imports, lacks legislative competency and is ultra vires the IGST Act, 2017, and therefore unconstitutional. The reasoning is based on the Supreme Court's decision in Union of India and Another Vs M/s Mohit Minerals Pvt. Ltd., Through Director, which upheld the Gujarat High Court's ruling on this matter. The ratio decidendi is that the levy of IGST on ocean freight in such circumstances is impermissible. The Court also permitted the Petitioner to apply for a refund of any such tax paid, directing the respondents to process and dispose of the application within eight weeks. No issue was expressly left undecided.

Facts

The Petitioner, Rawmet Resources (P) Ltd., filed a writ petition challenging the imposition of Integrated Goods and Services Tax (IGST) on ocean freight for imports under CIF contracts. The Petitioner argued that IGST had already been paid on the full CIF value, and a further imposition on ocean freight was unconstitutional. The Court had previously issued a rule and allowed parties to apply for enlistment after the Supreme Court decided the case of M/s. Mohit Minerals Pvt. Ltd. v. Union of India. The Petitioner presented the Supreme Court's judgment, which upheld the Gujarat High Court's decision in the Mohit Minerals case. Both parties agreed that the present petition could be decided based on this Supreme Court ruling.

Key Issues

1. Whether the imposition of IGST on ocean freight, in addition to IGST paid on the full CIF value of imports, lacks legislative competence and is ultra vires the IGST Act, 2017, and hence unconstitutional, as contended by the Petitioner? This issue turns on the interpretation of the IGST Act, 2017, and relevant notifications, particularly Notification No. 8/2017-Integrated tax (rate) and Entry 10 of Notification No. 10/2017-Integrated tax (rate), both dated 28.06.2017. 2. Whether IGST is payable on ocean freight where IGST has already been paid on the CIF value of imports, as challenged by the Petitioner? Contentions: Petitioner: Argued that the further imposition of IGST on ocean freight is unconstitutional and lacks legislative competency, citing the principle that tax should not be levied twice on the same transaction. Relied on the Gujarat High Court's decision in M/s. Mohit Minerals Pvt. Ltd. v. Union of India. Respondents: Agreed with the Petitioner's submission that the rule in the petition could be made absolute in terms of the Supreme Court's decision in Union of India and Another Vs M/s Mohit Minerals Pvt. Ltd., Through Director.