Case Law Details
Jwala Energy Resources Private Limited Vs Assistant Commissioners GST (Andhra Pradesh High Court)
In , the Andhra Pradesh High Court considered a dispute relating to refund of Integrated Goods and Services Tax (IGST) paid on ocean freight under reverse charge mechanism. The petitioner had imported coal for operating its power generation unit and had paid ocean freight charges on a CIF basis. Based on Entry No.10 of Notification No.10 of 2017, tax authorities required the petitioner to pay GST on the freight component. Subsequently, the Gujarat High Court in Mohit Minerals struck down the said notification entry, and the Supreme Court dismissed the Union’s appeal, thereby affirming the decision.
Following the Supreme Court judgment dated 19.05.2022, the petitioner sought refund of the IGST paid on ocean freight for the period 2018-2019 along with interest at 6% per annum. The petitioner had earlier filed a writ petition challenging the levy and seeking refund of Rs.68,36,372/-. The refund application filed on 07.07.2022 was not accepted on the GST portal, resulting in subsequent applications, and finally the application dated 13.01.2023 was acknowledged.
The refund claim was initially rejected on 22.08.2023 on the ground that it had been filed beyond the two-year limitation period prescribed under Section 54 of the APGST Act, 2017, and also because an earlier writ petition filed by the petitioner remained pending. The petitioner challenged this rejection through another writ petition. During those proceedings, the respondents stated that they were willing to sanction the refund if deficiencies were rectified. Pursuant to the High Court’s directions, the respondents refunded Rs.68,36,371/- on 07.06.2024 but rejected the claim for interest amounting to Rs.20,50,911/- by holding that interest was not payable under Sections 54 and 56 of the Act.
Before the High Court, the petitioner argued that the refund did not arise under Sections 54 or 56 of the Act because the levy itself had been declared unconstitutional. According to the petitioner, the GST collected on ocean freight constituted illegal extraction of money, and once the Supreme Court invalidated the notification, the amount became refundable from the date of deposit itself. The petitioner also relied upon prior judgments of the Andhra Pradesh High Court, Orissa High Court, and Bombay High Court to contend that interest must be paid from the date of deposit of the unconstitutional tax until the date of refund.
The revenue authorities contended that the refund application had been filed under Section 54 of the Act and the refund had been processed within the statutory period prescribed therein. Therefore, according to the respondents, no interest was payable because Section 56 permitted interest only when refund was delayed beyond the stipulated period.
The High Court referred to its earlier judgment in W.P.No.17220 of 2024 and batch, where it had held that Section 54 limitations would not apply in cases involving refund of taxes later declared unconstitutional. Relying upon judgments including Baburam v. C.C. Jacob and Comsol Energy Private Limited v. State of Gujarat, the Court reiterated that refund claims arising from unconstitutional levies stand on a different footing.
The Court rejected the revenue’s contention that interest was barred because the refund was granted within the time prescribed under Section 54. It observed that the Bombay High Court and Orissa High Court had already held that where a tax levy is subsequently declared unconstitutional, interest becomes payable from the date of deposit till the date of refund.
The Court further held that the principle underlying grant of interest is compensation for loss of use of money. This principle applies equally to private and public law transactions. Since the petitioner had paid GST on ocean freight under protest and the levy was later declared unconstitutional by the Supreme Court, the petitioner had been deprived of the use of its money from the date of payment till refund. Consequently, the petitioner was entitled to compensation in the form of interest for the entire period.
The Court found the petitioner’s claim for interest at 6% per annum to be fair and equitable and also noted that such rate aligned with Section 34 of the Code of Civil Procedure relating to post-decretal interest. Accordingly, the writ petition was allowed, the order rejecting interest dated 07.06.2024 was set aside, and the respondents were directed to pay interest at 6% on Rs.68,36,372/- from the date of deposit until 07.06.2024 within three months.
FULL TEXT OF THE JUDGMENT/ORDER OF ANDHRA PRADESH HIGH COURT
The petitioner had imported coal for the purposes of running its power generation unit. As for the purpose of importing coal, the petitioner had paid ocean freight charges to the suppliers of such coal, on C.I.F. basis. The Tax Authorities, relying upon Entry No.10 of Notification No.10 of 2017, had required the petitioner to pay G.S.T., on the freight paid by the petitioner, in these transactions.
2. The said Entry No.10 in Notification No.10 of 2017, came to be set aside, by a judgment of the Hon’ble High Court of Gujarat in the case of M/s. Mohit Minerals Pvt. Ltd. Vs. Union of India & another1. The challenge to this order of the Hon’ble High Court of Gujarat ended in a dismissal of the Civil Appeal by the Hon’ble Supreme Court. The judgment of the Hon’ble Supreme Court is reported as Union of India & another Vs. M/s. Mohit Minerals Pvt. Ltd.2.
3. The petitioner sought refund of the G.S.T. paid by the petitioner, on the quantum of ocean freight paid, on reverse charge basis, for the period, 2018-2019.
4. The petitioner had also challenged the said levy, by way of W.P.No.4014 of 2021, filed before this Court. Apart from challenging the vires of Entry No.10, the petitioner had also sought a direction to the respondents to refund an amount of Rs.68,36,372/-, which was the I.G.S.T. paid on the freight charges. The said Writ Petition is still pending before this Court.
5. As the judgment of the Hon’ble Supreme Court striking down Entry No.10, had been delivered, on 19.05.2022, the petitioner sought refund of the I.G.S.T. amount, along with interest @6% p.a., by way of an application, filed on 07.07.2022. This application was not accepted, on the G.S.T.N. portal, forcing the petitioner to file subsequent applications. Finally, the application, dated 13.01.2023, was acknowledged.
6. Subsequently, the refund application was rejected, by an order, dated 22.08.2023, on the ground that, the application had been filed more than two (02) years from the date of payment of tax and would be barred, under Section 54(14)(2)(h) of the A.P.G.S.T. Act, 2017 (hereinafter referred to as ‘the Act’). It was also rejected, on the ground that, W.P.No.4014 of 2021, was still pending. Aggrieved by the said order, dated 22.08.2023, the petitioner moved this Court, by way of W.P.No.27026 of 2023. In the course of the hearing of this Writ Petition, the respondents informed this Court that they were ready to sanction refund, provided the petitioner rectified certain deficiencies pointed out, in the deficiency notice given to the petitioner. This Court, had disposed of W.P.No.27026 of 2023, by an order, dated 18.10.2023, directing the respondents to dispose of the application of the petitioner for refund within the time stipulated in the order. Subsequently, the respondents, by an order, dated 07.06.2024, refunded the amount of Rs.68,36,371/-, but rejected the claim of interest to an amount of Rs.20,50,911/-, on the ground that, the interest was not payable, under Section 54 read with Section 56 of the Act.
7. Aggrieved by the said order, dated 07.06.2024, the petitioner has approached this Court, by way of the present Writ Petition.
8. Heard Sri D. S. Sivadarshan, the learned counsel appearing for the petitioner and Smt. V. Disha Chowdary, the learned Assistant Government Pleader for Commercial Taxes, appearing for the respondents.
9. It is the contention of the petitioner that the refund is not due and payable, on account of Section 54 or Section 56 of the Act. The petitioner also contends that, the amounts paid by the petitioner, ostensibly as G.S.T. on ocean freight, was an illegal extraction of money from the petitioner and that, the amount became due and payable to the petitioner from the date of deposit made by the petitioner. It is further contended that, this amount became due and payable, on account of the judgment of the Hon’ble Supreme Court in the case of Union of India & another Vs. M/s. Mohit Minerals Pvt. Ltd. in as much as the said judgment had struck down Entry No.10 of Notification No.10 of 2017 and also the said judgment would be effective from the date on which the Notification itself had been issued. It is further contended that, since the amount is due, on account of the declaration of law, by the Hon’ble Supreme Court, the question of application of Section 54 or Section 56 of the Act, would not arise.
10. The learned counsel appearing for the petitioner, would also rely upon the judgment of this Court, dated 14.08.2025, in W.P.No.17220 of 2024 & batch, for the proposition, that the refund of tax in a case where the levy of tax itself, has been declared as unconstitutional, would not be dependent, on Section 54 or Section 56 of the Act and that, the period of limitation stipulated in these provisions would not be applicable. The learned counsel would also rely upon a judgment of the Hon’ble High Court of Orissa delivered, on 22.01.2026, in W.P.(C) No.11618 of 2024, in the case of M/s. Paradeep Phosphates Limited Vs. Additional Commissioner & Ors. and the judgment of the Hon’ble High Court at Bombay, dated 17.10.2025, in W.P.No.3000 of 2023, in the case of West India Continental Oils Fats Pvt. Ltd. Vs. Union of India & Ors.. These two judgments are cited for the proposition that interest would be payable, from the date of deposit of any amount, as tax, where such tax is struck down subsequently, as unconstitutional.
11. The learned Assistant Government Pleader for Commercial Taxes, appearing for the respondents, on the other hand, would contend that, the application filed by the petitioner, was under Section 54 of the Act, and that, the petitioner, had also taken steps to rectify the defects, in such an application. It is also contended that, since the refund was made, under Section 54 of the Act, no interest would remain due in as much as Section 54 of the Act read with Section 56 of the Act, expressly stipulates that, interest can be levied or collected only, if the refund is not made within the time stipulated under Section 54 of the Act. It is further contended that, since the refund had been made within the stipulated time, under Section 54 of the Act, the question of interest would not arise.
12. In the case, relating to the judgment of this Court, in W.P.No.17220 of 2024 & batch, the question that arose before this Court was whether the application for refund of G.S.T. paid, on freight charges, relating to ocean freight, would be maintainable, even after the two year period stipulated, in Section 54 of the Act, had been expired. This Court, after noticing and following the judgment of the Hon’ble Supreme Court in the case of Baburam Vs. C.C. Jacob & Ors.3 and the judgment of the Hon’ble High Court of Gujarat in the case of Comsol Energy Private Limited. Vs. State of Gujarat4, had held that, the provisions of Section 54 of the Act, would not be applicable to cases of refund of tax, where such tax has subsequently been struck down as unconstitutional.
13. In such circumstances, the contention of the revenue that the interest is not payable as refund had been made within the period stipulated, under Section 54 of the Act, would have to be rejected.
14. The Hon’ble High Court at Bombay as well as the Hon’ble High Court of Orissa, had considered the question of whether the interest would have to be paid, from the date of deposit of the tax till the date of refund of such tax, if the tax, has been declared to be unconstitutional. Both the Hon’ble High Courts concurred in holding that, interest would have to be paid from the date of deposit of the tax till the date of refund of such tax. While we are in respectful agreement with the said principles laid down in the aforesaid judgments, we would also like to supplement the said view.
15.The principle underlying the grant of interest is to grant compensation for the loss of use of money and this principle applies, in relation to private transactions as well as transactions relating to public authorities. Once such a principle forms the basis for grant of interest, it would be necessary that the interest is paid for the period for which the tax payer has lost use of this money.
16. In the present case, the tax payer, namely the petitioner had paid G.S.T., on freight charges, under protest. The stand of the petitioner was vindicated by the judgment of the Hon’ble Supreme Court in the case of Union of India & another Vs. M/s. Mohit Minerals Pvt. Ltd. and the levy itself was declared to be unconstitutional. In such circumstances, it would have to be held that the petitioner had been deprived of the right of use of the money paid, on G.S.T., as freight charges from the date of payment till the date of refund. The petitioner would therefore be entitled to be compensated for the loss of use of such money. It must be held that the petitioner would be entitled to interest from the date of deposit of the tax till the date of refund.
17. The next question that would remain is the rate of interest that has to be The petitioner has claimed interest @6%. This rate of interest, appears to be fair and equitable. Apart from that, the said rate of interest is in line with Section 34 of C.P.C., which permits interest to be granted @6%, for the post decretal period.
18. For all the aforesaid reasons, this Writ Petition is allowed, setting aside the order of rejection of the interest, dated 07.06.2024, with a further direction to the respondents to pay the interest to the petitioner @6%, on the sum of Rs.68,36,372/-, calculated from the date of deposit of such amount till 07.06.2024. The said exercise is to be completed within a period of three (03) months from today.
There shall be no order as to costs.
As a sequel, interlocutory applications pending, if any shall stand closed
Notes:
1 2020 (1) TMI 974, 2020 (33) G.S.TL. 321 (Guj.)
2 2022 (5) TMI 968, (2022) 10 SCC 700
3 (1999) 3 SCC 362
4 2020 SCC Online Guj 3601 = (2021) 55 GSTL 390
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