S.N. Tradelink Pvt. Ltd. Vs State of Gujarat & Ors. (Gujarat High Court)
Summary: The Gujarat High Court, in S.N. Tradelink Pvt. Ltd. Vs State of Gujarat & Ors., considered a writ petition challenging the rejection of refund claims for Integrated Goods and Services Tax (IGST) paid on ocean freight under Entry No. 10 of Notification No. 10/2017-Integrated Tax (Rate) dated 28 June 2017. Following the Supreme Court’s landmark judgment in Union of India Vs Mohit Minerals Pvt. Ltd., the petitioner filed refund applications along with supporting documents, including a Chartered Accountant’s certificate confirming that the tax burden had not been passed on. However, the GST authorities rejected the applications on three grounds: the claims were time-barred under Section 54 of the CGST Act, 2017; the IGST input tax credit had already been utilised; and the refund did not fall within the categories prescribed under Section 54(3). The petitioner contended that the refund arose from the invalidation of the ocean freight levy and that the statutory limitation should not defeat its claim.
The petitioner further argued that the utilisation of IGST credit had been carried out in accordance with Section 49(5) of the CGST Act read with Rule 88A of the CGST Rules, and that sufficient credit was available under the CGST and SGST heads. During the writ proceedings, the petitioner submitted an additional affidavit and supporting documents demonstrating reversal of the relevant credit utilisation through Form GST DRC-03 to facilitate the refund of IGST paid on ocean freight. The petitioner relied upon the Gujarat High Court decisions in Torrent Power Ltd. Vs Union of India, The Sandesh Ltd. Vs Union of India, Jupiter Comtex Pvt. Ltd. Vs Union of India and Comsol Energy Private Limited Vs State of Gujarat. Significantly, the respondent authorities acknowledged in their affidavit that the credit reversal undertaken through Form GST DRC-03 had been examined and found correct. The State nevertheless maintained that the original refund applications had been rejected because of limitation, previous utilisation of credit and non-compliance with the conditions governing refund of unutilised ITC.
Considering the submissions and the State’s verification of the credit reversal, the Gujarat High Court held that the impugned orders rejecting the petitioner’s IGST refund claims could not be sustained. The Court accordingly quashed and set aside the refund rejection orders and directed the respondent authorities to pass a fresh de novo order granting refund to the petitioner in accordance with the Supreme Court’s decision in Mohit Minerals Pvt. Ltd. and the other Gujarat High Court judgments relied upon. The authorities were directed to complete this exercise within 12 weeks from receipt of a copy of the judgment. The ruling highlights the importance of properly examining credit reversal and utilisation records while deciding refund claims arising from the ocean freight IGST controversy. However, the Court did not separately determine the exact refundable amount or conclusively adjudicate every objection concerning limitation. The petition was disposed of with the aforesaid directions and without any order as to costs.
Cases Discussed
- Union of India v. Mohit Minerals Pvt. Ltd. — Civil Appeal No. 1390 of 2022, Supreme Court, 19/05/2022 (TaxGuru discussion; not dedicated judgment)
- Torrent Power Ltd. v. Union of India — SCA No. 2603/2022, Gujarat High Court, 04/08/2022
- The Sandesh Ltd. v. Union of India — SCA No. 12757/2021, Gujarat High Court, 04/08/2022
- Jupiter Comtex Pvt. Ltd. v. Union of India — SCA No. 1280/2024, Gujarat High Court, 14/02/2024
- Comsol Energy Private Limited v. State of Gujarat — SCA No. 11905/2020, Gujarat High Court, 21/12/2020
FULL TEXT OF THE JUDGMENT OF GUJARAT HIGH COURT
1. Heard learned advocate Mr. Uchit N. Sheth for the petitioner and learned Assistant Government Pleader Ms. Shrunjal Shah for the respondents.
2. Having regard to the controversy involved in this petition, which is in a narrow compass, with the consent of the learned advocates for the respective parties, the matter is taken up for hearing.
3. Rule returnable forthwith. Learned Assistant Government Pleader Ms. Shrunjal T.Shah waives service of notice of rule on behalf of the respondents.
4. By this petition under Article 226 of the Constitution of India, the petitioner has prayed for the following reliefs:
“A. This Hon’ble Court may be pleased to issue a writ of mandamus or writ in the nature of mandamus or any other appropriate writ or order directing the Respondents to forthwith grant refund of the amount of IGST paid by the Petitioner pursuant to Entry No. 10 of Notification No.10/2017-IGST (Rate) dated 28.6.2017 along with appropriate interest on such refund; Annexure ‘A’
B. This Hon’ble Court may be pleased to issue a writ of certiorari or writ in the nature of certiorari or any other appropriate writ or order quashing and setting aside orders (annexed at Annexure G) rejecting refund of IGST paid on the basis of the impugned Entry No. 10 of Notification No.10/2017-IGST (Rate) dated 28.6.2017; Annexure’A’
C. Without prejudice to the above and in the alternative this Hon’ble Court may be pleased to issue a writ of mandamus or writ in the nature of mandamus or any other appropriate writ or order directing the Respondents to allow rectification of returns filed by the Petitioners so as revive input tax credit balance under the IGST head with corresponding utilization from CGST and SGST head;
D. Pending notice, admission and final hearing of this petition, this Hon’ble Court may be pleased to direct the Respondents to grant refund of the amount of IGST paid by the Petitioner pursuant to Entry No. 10 of Notification No.10/2017-IGST (Rate) dated 28.6.2017 along with appropriate interest on such refund; at Annex.A
E. Ex parte ad interim relief in terms of prayer D may kindly be granted;
F. Such further relief(s) as deemed fit in the facts and circumstances of the case may kindly be granted in the interest of justice for which act of kindness your petitioner shall forever pray.”
5. Brief facts of the case are that the petitioner filed applications for refund for the IGST paid on the Ocean Freight from time to time after pronouncement of the judgment by the Hon’ble Supreme Court in case of Union of India v. Mohit Minerals Pvt. Ltd. decided on 19.05.2022 in Civil Appeal No.1390 of 2022 and allied matters along with necessary documents including Chartered Accountant Certificate regarding non-passing of tax burden. The petitioner also filed separate applications in the month of March and April,2025.
6. The respondent authorities issued the show cause notice upon the petitioner in the month of May, 2025 proposing to reject the refund application on the following grounds:
i) Such applications are time barred.
ii) IGST credit has already been utilised by the petitioner.
iii) The refund claim did not fall within the categories stipulated under section 54(3) of the CGST Act.
7. The petitioner filed a detail reply to the show cause notice explaining that the refund was based on the notification having been declared unconstitutional by the Hon’ble Supreme Court and therefore, limitation under section 54 of the GST Act would not apply. The petitioner also contended that the credit was utilised in accordance with the order of utilisation as stipulated under section 49(5) of the GST Act read with Rule 88A of the GST Rules and there was sufficient balance available under the CGST and SGST heads and therefore, the question of credit being utilised by the petitioner did not arise. The petitioner also has sought the permission to rectify Form GSTR-3B to reverse the credit and thereafter claim the refund.
8. However, the respondent authorities rejected the refund application by the impugned orders passed in May, 2025.
9. Being aggrieved, the petitioner has preferred this petition.
10. Learned advocate Mr. Uchit Sheth for the petitioner at the outset invited the attention of the Court to the additional affidavit filed on behalf of the petitioner for reversing the utilisation of input tax credit in the Electronic Credit Ledger under the head of SGST towards Integrated Goods and Service Tax so as to enable the availment of refund of excess IGST paid by the petitioner on ocean freight and relied upon the Form GST DRC-03 from page nos. 379D to 379ZZA of the petition. He also referred to the detail statement placed on record along with the additional affidavit at page no.379C of the petition. It was therefore, submitted that the refund claim of the petitioner is required to be allowed as prayed for.
11. In support of his submissions, reliance was placed on the following decisions of this Court:
1) Torrent Power Ltd/ v. Union of India (Order dated 04.08.2022 rendered in Special Civil Application No.2603/2022).
2) The Sandesh Ltd. v. Union of India (Order dated 04.08.2022 rendered in Special Civil Application No.12757/2021).
3) Jupiter Comtex Pvt. Ltd. v. Union of India (Order dated 14.02.2024 rendered in Special Civil Application No.1280/2024).
4) M/s. Comsol Energy Private Limited v. State of Gujarat (Judgment dated 21.12.2020 rendered in Special Civil Application No. 11905/2020).
12. On the other hand, learned Assistant Government Pleader Ms. Shrunjal Shah for the respondents referred to and relied upon the affidavit in reply filed on behalf of respondent no.1, wherein it is averred as under: “
4. The Petitioner had claimed refund of IGST paid on Ocean Freight vide various applications filed in the month of March and April 2025. However, such refund applications were rejected primarily on two grounds
a. The Refund is time barred because the application is filed beyond the statutory time limit of 2 years. The refund that is being claimed is of the period of 2017, 2018 and 2019 but the applications are made only in 2025. This is further beyond 2 years from the judgement of the Hon’ble Supreme Court in the case of UOl vs. Mohit Minerals which is dated 19.05.2022.
b. Since the IGST which is sought to be refunded is already availed and utilized, refund cannot be granted. It was held that even though credit utilization is automatic as per Rule 88A and Section 49(5) law does not recognize constructive non- utilization merely because of availability of SGST or CGST.
c. Conditions of s. 54(3) does not get fulfilled and further since there is no unutilized ITC to grant any refund.
5. It is further submitted that during the pendency of this Petition before the Hon’ble Court, the Petitioner has reversed the unutilized ITC in its electronic credit ledger from the State Goods and Services Tax (SGST) head to the IGST head by filing Form DRC- 03.
6. It is submitted that I have verified the additional affidavit dated 19.09.2025 along with the Annexures filed by the Petitioner. The Petitioner has reversed an amount of 21,47,54,168/- (Rupees One Crore Forty-Seven Lakh Fifty- Four Thousand One Hundred Sixty- Eight Only) towards IGST by filing Form DRC-03. I state that upon verification, such reversal has been found to be correct and in order.”
13. Referring to above averments, it was submitted that the respondents have verified the reversal of credit utilised under SGST towards IGST by filing Form GST DRC-03 and such reversal was found to be correct. It was therefore, submitted that appropriate order directing the respondents to issue the refund may be passed.
14. Considering the above submissions, the impugned order of rejecting the refund claim of the petitioner is hereby quashed and set aside and the respondent authorities are directed to pass a fresh de-novo order to grant refund to the petitioner in view of decision of Hon’ble Apex Court in case of Mohit Minerals Pvt. Ltd. (supra) and other decisions of this Court cited by learned advocate for the petitioner. Such exercise shall be completed within a period of 12 weeks from the date of receipt of a copy of this order.
15. Petition is accordingly disposed of. Rule is made absolute to the aforesaid extent. No order as to costs.
