Agarwal Coal Corporation Private Limited vs. Union Of INDIA & Anr.

Held

The Court held that Notification No. 8/2017-Integrated Tax (Rate) dated 28th June, 2017 and entry 10 of Notification No. 10/2017-Integrated Tax (Rate) dated 28th June, 2017 are ultra vires the Integrated Goods and Services Tax Act, 2017. The reasoning was based on the undisputed submission by the petitioners that the Supreme Court, in the case of Union of India vs. Mohit Minerals Pvt. Ltd. (2022 SCC Online SC 657), had decided the issue in their favour. Consequently, the Court held that no tax is leviable under the IGST Act, 2017 on ocean freight for services supplied by 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 impugned notifications were quashed. The writ petitions were disposed of with these directions.

Facts

The petitioners, including Swiss Singapore India Private Limited, Agarwal Coal Corporation Private Limited, Saraogi Udyog Private Limited, and Narendra Plastic Private Limited, filed writ petitions challenging certain GST notifications. The core issue revolved around the levy of Integrated Goods and Services Tax (IGST) on ocean freight for services supplied by entities located in non-taxable territories, specifically for the transportation of goods by vessel from outside India to the Indian customs station of clearance. The tax periods are not explicitly stated, but the challenge is to notifications issued in 2017. The authority that passed the impugned orders is not specified, but the challenge is to notifications issued by the Revenue.

Key Issues

1. Whether Notification No. 8/2017-Integrated Tax (Rate) dated 28th June, 2017 and entry 10 of Notification No. 10/2017-Integrated Tax (Rate) dated 28th June, 2017 are ultra vires the Integrated Goods and Services Tax Act, 2017, concerning the levy of IGST on ocean freight for services supplied by 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? Petitioner's Contention: The petitioners argued that the impugned notifications are ultra vires the IGST Act, 2017. They relied on the Supreme Court's decision in Union of India vs. Mohit Minerals Pvt. Ltd. (2022 SCC Online SC 657) which they contended had decided the matter in their favour. Respondents' Contention: The respondents, represented by learned counsel for the Union of India and others, did not dispute the fact that the Supreme Court had decided the matter in favour of the petitioners.