Gujarat State Electricity Corporation LTD. vs. Union Of INDIA

Facts

The petitioner, Gujarat Electricity Corporation Ltd., filed a writ application challenging notifications issued under the Integrated Goods and Services Tax Act, 2017. Specifically, the petitioner sought to quash Notification No. 8/2017-Integrated Tax (Rate) dated 28.06.2017 and Entry 10 of Notification No. 10/2017-Integrated Tax (Rate) dated 28.06.2017. The petitioner argued that these notifications lacked legislative competency and were ultra vires the Act. The core of the dispute involved the levy of GST on ocean freight for services supplied by a person located in a non-taxable territory, for the transportation of goods from outside India to a customs station in India. The petitioner also sought a refund of Rs. 204,350,596.49 collected as tax and interest.

Held

The Court held that no tax is leviable under the Integrated Goods and Services Tax Act, 2017, on the ocean freight for services provided 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 Court found that in a CIF contract, the contract for transportation is entered into by the seller (foreign exporter), not the buyer (importer), meaning the importer is not the recipient of the transportation service. Consequently, the Court declared 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 as ultra vires the Integrated Goods and Services Tax Act, 2017, for lacking legislative competency, and thus unconstitutional. The Court allowed the writ application and related connected applications. Ancillary reliefs were to be pursued by the petitioner with the concerned department.

Key Issues

1. Whether Notification No. 8/2017-Integrated Tax (Rate) dated 28.06.2017 and Entry 10 of Notification No. 10/2017-Integrated Tax (Rate) dated 28.06.2017 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 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 arguments: The petitioner contended that the impugned notifications lacked legislative competency and were ultra vires the IGST Act, 2017. They argued that no tax should be leviable on ocean freight for services provided by foreign entities for goods imported into India, as the importer is not the recipient of the transportation service in a CIF contract. They sought a declaration that the levy and collection of tax on such ocean freight were impermissible. Revenue's arguments: The judgment does not explicitly record arguments made by the revenue or respondents.