Rr Kabel Limited vs. Union Of INDIA

Held

The Court held that no tax is leviable under the Integrated Goods and Services Tax Act, 2017, on 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 the levy and collection of tax on such ocean freight under the impugned notifications were not permissible in law. The reasoning was that the impugned notifications lacked legislative competency and were therefore ultra vires the Integrated Goods and Services Tax Act, 2017. Consequently, both Notification No. 8/2017 – Integrated Tax (Rate) and Entry 10 of Notification No. 10/2017 – Integrated Tax (Rate), both dated June 28, 2017, were declared ultra vires and unconstitutional. The writ petition and all connected applications were allowed, and all consequential proceedings pursuant to the quashed notifications were terminated.

Facts

The petitioner, RR Kabel Limited, filed a Special Civil Application before the Gujarat High Court challenging certain GST notifications. The Court, in its order dated February 5, 2020, noted that the matter was covered by its previous judgment and order dated January 23, 2020, in the case of Mohit Minerals Pvt Ltd. V/s. Union of India & 1. In that earlier judgment, the Court had discussed the leviability of IGST on ocean freight for services provided by a person located in a non-taxable territory for the transportation of goods from outside India to a customs station in India. The specific notifications under challenge in the Mohit Minerals case, and by extension in this case, were Notification No. 8/2017 – Integrated Tax (Rate) and Entry 10 of Notification No. 10/2017 – Integrated Tax (Rate), both dated June 28, 2017.

Key Issues

1. Whether tax is leviable under the Integrated Goods and Services Tax Act, 2017, on 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? (Question of law, concerning the interpretation and applicability of the IGST Act, 2017). 2. Whether the levy and collection of tax on such ocean freight under the impugned notifications are permissible in law? (Question of law, concerning the validity of the notifications). Petitioner's Arguments: The petitioner, by implication, argued that the levy of IGST on ocean freight under the impugned notifications was not permissible. The Court's reference to the Mohit Minerals judgment suggests that the petitioner's arguments in that case, which were accepted by the Court, would apply here. Revenue's Arguments: The judgment does not explicitly record the arguments made by the revenue or the Union of India in this specific writ application. However, the Court's decision implies that the revenue contended for the validity of the levy and the notifications.