Union Of INDIA And Ors. vs. Mcpi Private Limited And Anr
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The revenue (Union of India and another) filed these appeals against the order of a learned Single Bench of the Calcutta High Court dated March 12, 2020, which allowed a writ petition filed by MCPI Private Limited (respondent). The Single Bench had followed a Gujarat High Court decision holding that no IGST was leviable on ocean freight for services provided by a person located in a non-taxable territory, transporting goods from outside India to a customs station in India. The notification impugned in the writ petition was declared unconstitutional. The Supreme Court's decision on a related Special Leave Petition was pending during the initial hearings. The respondent informed the Court that the Supreme Court, in Civil Appeal No. 1390 of 2022, had affirmed the Gujarat High Court's decision.
Held
The Court held that the Supreme Court, in Civil Appeal No. 1390 of 2022 (Union of India and Anr. Vs. M/s. Mohit Minerals Pvt. Ltd. and ors.), had affirmed the decision of the Gujarat High Court. The Supreme Court, in paragraph 147 of its judgment, agreed with the view that a tax on the supply of a service, which has already been included by the legislation as a tax on the composite supply of goods, cannot be allowed. Consequently, the Calcutta High Court found no grounds to interfere with the order passed by the learned Single Bench, which had followed the Gujarat High Court's decision. The appeals filed by the revenue were dismissed.
Key Issues
1. Whether the impugned notification is unconstitutional and void ab initio, violating the provisions of the Integrated Goods and Services Tax Act, 2017 (IGST Act) and the Constitution of India? The petitioner (respondent in appeal) argued that the impugned notification, which sought to levy IGST on ocean freight for services provided by a person located in a non-taxable territory for transportation of goods from outside India to India, was unconstitutional. They relied on the Gujarat High Court's decision in Mohit Minerals Pvt. Ltd. Vs. Union of India & 1 ors., which held that no tax is leviable under the IGST Act on ocean freight under such circumstances. The revenue (appellant) argued that the levy was valid, but did not present specific arguments beyond challenging the Gujarat High Court's decision, which was subsequently affirmed by the Supreme Court.
Sections Cited
Integrated Goods and Services Tax Act, 2017
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Cause title — parties, addresses and appearances
JUDGMENT (Judgment of the Court was delivered by T.S. SIVAGNANAM, J.)
of India & 1 ors.) wherein it was held that no tax is leviable under the Integrated Goods and Services Tax Act, 2007, on ocean freight, for services provided by a person, located in a non- taxable territory, by way of transportation of goods on a vessel from a place outside India up to Customs station of clearance in India.
In the said decision, the notification, which was also impugned in the writ petition filed by the respondent was declared to be unconstitutional. When these appeals were heard by us on 11th November, 2021, it was brought to our notice that as against the decision of the High Court of Gujarat in Mohit Minerals Pvt. Ltd., Special Leave Petition has been filed before the Hon’ble Supreme Court and the same was pending. Noting the said submission, the hearing of the appeals was deferred awaiting the decision of the Hon’ble Supreme Court. The prayer for interim stay sought for by the appellant revenue was rejected by the said order. Subsequently, the matters were heard by us on 18th January, 2022 and noting that the appeal before the Hon’ble Supreme Court was still pending, the matters were adjourned. 3
The Learned Advocate appearing for the respondent submitted that the Hon’ble Supreme Court in Civil Appeal No.1390 of 2022 dated May 19, 2022 in Union of India and Anr. Vs. M/s. Mohit Minerals Pvt. Ltd. and ors. has affirmed the decision of the High Court of Gujarat, which was relied on to allow the writ petition filed by the respondent before us.
We have perused the judgment and in paragraph 147, the Hon’ble Supreme Court while agreeing with the view taken by the High Court held to the extent that a tax on the supply of a service, which has already been included by the legislation as a tax on the composite supply of goods, cannot be allowed.
In the light of the decision of the Hon’ble Supreme Court, no grounds have been made to interfere with the order passed by the Learned Single Bench.
Accordingly, the appeals are dismissed.
No costs. 4
Urgent photostat certified copy of this order, if applied for, be furnished to the parties expeditiously upon compliance of all legal formalities.
(T.S. SIVAGNANAM, J)
I agree,
(HIRANMAY BHATTACHARYYA, J.)
NAREN/PALLAB(AR.C) 5
Reproduced from the public record of the Calcutta High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.