M/S Agarwal Fuel Corporation Private Limlited Thru. Vishnu Kushwaha vs. Union Of INDIA

Held

The Court held that the petitioner is not liable to pay 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. This decision was based on the Apex Court's judgment in Union of India Vs. Mohit Minerals Pvt. Ltd, 2022 SCC Online SC 657. The Court reasoned that the Apex Court had already settled this issue, establishing that such ocean freight charges do not constitute an 'import of service' under the IGST Act, and therefore, IGST is not leviable. Consequently, the impugned notification No. 8/2017-Integrated Tax (rate) dated June 28, 2017, and entry 10 of notification 10/2017 Integrated Tax (Rate) dated June 28, 2017, were quashed as being ultra vires the provisions of the IGST Act. The ratio decidendi is that ocean freight for goods imported into India is not taxable as an 'import of service' under the IGST Act, following the precedent set by the Supreme Court.

Facts

The petitioner, M/s Agarwal Fuel Corporation Private Limited, filed a writ petition challenging the levy of IGST on ocean freight. The petitioner is represented by Vishnu Kushwaha, Deputy Manager. The respondents are the Union of India, through the Secretary, Department of Revenue, Ministry of Finance, and the Secretary, Goods and Services Tax Council. The petition was filed in 2017. The core of the dispute revolves around the taxability of ocean freight for services supplied by entities located outside India, specifically for the transportation of goods by vessel from outside India to the Indian customs station. The impugned actions are notification No. 8/2017-Integrated Tax (rate) dated June 28, 2017, and entry 10 of notification 10/2017 Integrated Tax (Rate) dated June 28, 2017.

Key Issues

1. Whether 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, is legally sustainable under the Integrated Goods and Services Tax Act, 2017? The petitioner, M/s Agarwal Fuel Corporation Private Limited, argued that IGST should not be leviable on ocean freight in the specified circumstances. The petitioner relied on the Apex Court's decision in Union of India Vs. Mohit Minerals Pvt. Ltd, 2022 SCC Online SC 657, to support their contention. The respondents, Union of India and the Secretary, Goods and Services Tax Council, did not record any specific arguments in the judgment. However, their implicit stance was in favor of the levy, as evidenced by the notifications being challenged.