Lakhpat Trading And Industrys Private LTD. vs. Union Of INDIA

Held

The Court noted that the learned counsel for the petitioners was only pressing reliefs (iii), (iv), and (v), which pertained to the challenge of the notifications and the refund of IGST. The petitioners argued that these reliefs were covered by the Gujarat High Court's decision in Mohit Minerals Private Limited vs. Union of India and Ors. The respondents' counsel failed to controvert this fact, acknowledging that the issue was covered by the Gujarat High Court's decisions. The respondents did mention that the Mohit Minerals judgment was under challenge before the Apex Court, but its operation had not been stayed. The Court then referred to the operative parts of the Gujarat High Court's judgments in Mohit Minerals Private Limited and M/s COMSOL Energy Private Limited. In Mohit Minerals, the Gujarat High Court declared Notification No. 8/2017 and Entry 10 of Notification No. 10/2017 as ultra vires the IGST Act, 2017, for lacking legislative competency and being unconstitutional. In M/s COMSOL Energy Private Limited, the Gujarat High Court directed the respondent to sanction the refund of IGST paid. Based on these submissions and the Gujarat High Court's decisions, the Rajasthan High Court disposed of the petition in terms of those judgments.

Facts

The petitioners, Lakhpat Trading And Industrys Private Ltd. and Ameet Bhandarri, filed a writ petition challenging certain provisions of the IGST Act, 2017, and related notifications. Specifically, they sought to strike down Section 9 of the Constitution (One Hundred and First Amendment) Act, 2016, and Sections 7(2) & 7(4) of the IGST Act, 2017. They also challenged Entry No. 9(ii) and its proviso, and paragraph 4 of the Explanation in Notification No. 8/2017-Integrated Tax (Rate), and Entry No. 10 of Notification No. 10/2017-Integrated Tax (Rate), both dated June 28, 2017. The core dispute revolved around the levy of IGST on ocean freight services rendered by overseas sellers to Indian importers on a Reverse Charge Mechanism (RCM) basis. The petitioners sought a declaration that no IGST is leviable on such services and a refund of IGST already recovered.

Key Issues

1. Whether Section 9 of the Constitution (One Hundred and First Amendment) Act, 2016, in so far as it introduced an Explanation to Clause 1 of Article 269-A, is liable to be struck down? (Petitioner's contention: Yes, it is ultra vires. Revenue's contention: Not recorded). 2. Whether Sections 7(2) & 7(4) of the IGST Act, 2017, which create a deeming fiction equating the import of goods and services into India with inter-state trade and commerce, are ultra vires and liable to be struck down for being enacted outside the legislative competence of Parliament and in contravention of Supreme Court judgments? (Petitioner's contention: Yes. Revenue's contention: Not recorded). 3. Whether Entry No. 9(ii), its proviso, and para No. 4 of the Explanation in Notification No. 8/2017-Integrated Tax (Rate) dated 28.06.2017, and Entry No. 10 of Notification No. 10/2017-Integrated Tax (Rate) dated 28.06.2017, are ultra vires the IGST Act, 2017, dehors legislative competence, and suffer from excessive delegation? (Petitioner's contention: Yes. Revenue's contention: Not recorded). 4. Whether IGST is leviable on an importer of goods from overseas sellers on ocean freight services rendered by a person located in a non-taxable territory to an overseas seller, by way of transportation of goods by a vessel from outside India up to the customs station of clearance in India, on an RCM basis, as otherwise mandated by the impugned provisions? (Petitioner's contention: No IGST is leviable. Revenue's contention: Not recorded).