Indorama Industires LTD vs. Union Of INDIA And Another

Held

The Court held that the issue was no longer res integra in view of the judgment rendered by a three-Judge Bench of the Hon'ble Supreme Court in Union of India vs. M/s Mohit Minerals Pvt. Ltd., decided on May 19, 2022. The Supreme Court's conclusion, particularly from paragraph 132 onwards and the conclusion in paragraph 148(c)(v), was relied upon. The Supreme Court had held that the impugned levy imposed on the 'service' aspect of the transaction was in violation of the principle of 'composite supply' enshrined under Section 2(30) read with Section 8 of the CGST Act. Since the Indian importer is liable to pay IGST on the 'composite supply' comprising of supply of goods and supply of services of transportation, insurance, etc., in a CIF contract, a separate levy on the Indian importer for the 'supply of services' by the shipping line would be in violation of Section 8 of the CGST Act. Consequently, the instant petition was allowed, and Respondent No. 1 was directed to refund the amount along with interest strictly in accordance with the judgment in M/s Mohit Minerals Pvt. Ltd.'s case, as expeditiously as possible and in any event by November 30, 2022.

Facts

Indorama Industries Limited (Petitioner) filed a writ petition challenging Notifications No. 8/2017-Integrated Tax (Rate) and No. 10/2017-Integrated Tax (Rate), both dated June 28, 2017. The Petitioner sought to declare these notifications lacking legislative competency, ultra vires to the Integrated Goods and Services Tax Act, 2017, and unconstitutional. Specifically, the Petitioner argued that no tax should be leviable under the IGST Act on services supplied by a person in a non-taxable territory to another person in a non-taxable territory, by way of transportation of goods by vessel from outside India to a customs station in India. The Petitioner also sought a refund of INR 114.00 Lakhs in IGST and INR 6.29 Lakhs in interest, deposited under Entry 10 of Notification No. 10/2017-Integrated Tax (Rate), or alternatively, the Input Tax Credit for the IGST paid.

Key Issues

1. Whether Notification No. 8/2017-Integrated Tax (Rate) and entry 10 of Notification No. 10/2017-Integrated Tax (Rate), dated June 28, 2017, are ultra vires the Integrated Goods and Services Tax Act, 2017, and unconstitutional due to lack of legislative competency. 2. Whether tax is leviable under the Integrated Goods and Services Tax Act, 2017, on services supplied by a person located in a non-taxable territory to a person located in a non-taxable territory by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India. The Petitioner argued that the impugned notifications lacked legislative competency and were ultra vires the IGST Act. They contended that no tax should be levied on the transportation of goods by vessel from outside India to the Indian customs station, as it involved a supply between entities in non-taxable territories. The Petitioner further argued that the levy was impermissible and not recoverable from an 'importer' as defined under the Customs Act, 1962. The Petitioner sought a refund of the IGST and interest paid, or alternatively, Input Tax Credit. The Respondents, Union of India and Goods and Services Tax Council, were confronted with the Supreme Court's judgment in Union of India vs. M/s Mohit Minerals Pvt. Ltd.