Madras High Court Sets Aside Rejection of IGST Ocean Freight Refund Claim

ARS Energy Private Limited Vs Additional Commissioner (Appeals) (Madras High Court)

Summary: The Madras High Court disposed of the writ petition filed by ARS Energy Private Limited challenging the rejection of its refund claim relating to IGST paid on Ocean Freight Charges under the Reverse Charge Mechanism (RCM). The petitioner had paid IGST on Ocean Freight Charges for December 2017 amounting to Rs.10,53,594/- and January 2018 amounting to Rs.13,25,232/-. The petitioner contended that Ocean Freight Charges would ordinarily be included by the exporter in the cost of the imported goods and that, since IGST had already been paid on the imported goods, a separate levy of IGST on Ocean Freight Charges under RCM resulted in double taxation.

The petitioner relied upon the Supreme Court decision in Union of India vs. Mohit Minerals Pvt Ltd., reported in 2022 (5) TMI 968, submitting that the levy of IGST on Ocean Freight Charges under RCM had been set aside by the Gujarat High Court and the decision had been confirmed by the Supreme Court. The petitioner therefore sought reconsideration of the refund application.

The refund application had originally been rejected by the Department on 18.06.2020, after which the petitioner approached the Appellate Authority. The Appellate Authority also rejected the application by order dated 24.09.2020. The Revenue submitted that the refund had not been rejected only on the substantive issue but also on the ground of limitation. The petitioner, however, contended that, in view of the subsequent law declared by the Supreme Court in Mohit Minerals, the refund claim required reconsideration.