Ocean Freight Services is not subjected to GST: Madras HC

Viterra India Pvt Ltd Vs Union of India (Madras High Court)

Madras High Court held that GST is not leviable on Ocean Freight Services as per Supreme Court judgement and relevant notification. Thus, any amount collected by department as GST on Ocean Freight Services needs to be refunded back.

Facts- This Writ Petition is filed to quash the order in appeal dated 03.12.202 1 and rectification order dated 28.06.2022 passed by the respondent Nos.2 and 3 respectively and direct the respondents to forthwith sanction and grant the refund of Rs. 13,147/- along with appropriate interest for the month of July 2019.

It is submitted by the learned counsel for the petitioner as well as the learned counsel for the respondents that the issue stands covered by the judgment of the Hon’ble Supreme Court in 2022(61)GSTL 257 (SC) confirming the judgment of Gujarat High Court, wherein it was held that the levy of GST on Ocean Freight Services vide notification 8/2017-IT(Rate), dated 28.07.2017 and the Entry of the Notification No.10 of 2017-IT(Rate), dated 06.2017 was struck down.

Conclusion- Held that it is an admitted fact that the issue of levy of GST on Ocean Freight Services is settled by the Hon’ble Supreme Court and the Notification 8/2017- IT(Rate) dated, 28.07.2017 and the Entry of the Notification No.10 of 2017-IT(Rate), dated 06.2017 is struck down as ultra vires. In such circumstances the respondents are not empowered to collect GST for the Ocean Freight Services and consequently the respondents are bound to refund the amount collected.

FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT

This Writ Petition is filed to quash the order in appeal dated 03.12.202 1 and rectification order dated 28.06.2022 passed by the respondent Nos.2 and 3 respectively and direct the respondents to forthwith sanction and grant the refund of Rs. 13,147/- along with appropriate interest for the month of July 2019.

2. It is submitted by the learned counsel for the petitioner as well as the learned counsel for the respondents that the issue stands covered by the judgment of the Hon’ble Supreme Court in 2022(61)GSTL 257 (SC) confirming the judgment of Gujarat High Court, wherein it was held that the levy of GST on Ocean Freight Services vide notification 8/2017-IT(Rate), dated 28.07.2017 and the Entry of the Notification No.10 of 2017-IT(Rate), dated 06.2017 was struck down. The relevant portion of the judgment is extracted hereunder:

“3. The issue raised in this Writ petition was already allowed in favour of the assessee by the Hon’ble Gujarat High Court in the case of Mohit Minerals V. Union of India, reported in [2020 (33) GSTL 321 (Guj.) whereby the Notification 8/2017- IT(Rate) dated, 28.07.2017 and the Entry of the Notification No.10 of 2017-IT(Rate), dated 06.2017 was struck down. Subsequently the Department preferred SLP before the Hon ‘ble Supreme Court, whereby the Civil Appeal was dismissed vide order dated 19.05.2022 reported in 2022 (61) GSTL 257 (SC) confirming the judgment of Gujarat High Court holding that the levy of GST on Ocean Freight Services vide the notification stated supra is ultra vires section 8 of the CGST Act as well as section 5(3) of the IGST Act and accordingly no GST is leviable on such service.

4. Based on the aforesaid judgment, the petitioner had filed rectification application dated 30.05.2022 under section 161 of CGST to rectify the Order-in-Original dated 03.12.2012, but the respondents rejected the application vide order dated 28.06.2022, stating that the petitioner is having remedy before the Goods and Service Tax Appellate Tribunal. However the Tribunal has not been constituted and thus the Tribunal is not in existence. Hence the petitioner had filed the present writ petition.

5. It is an admitted fact that the issue of levy of GST on Ocean Freight Services is settled by the Hon ’ble Supreme Court and the Notification 8/2017- IT(Rate) dated, 28.07.2017 and the Entry of the Notification No.10 of 2017-IT(Rate), dated 06.2017 is struck down as ultra vires. In such circumstances the respondents are not empowered to collect GST for the Ocean Freight Services and consequently the respondents are bound to refund the amount collected.

6. Therefore, the respondents are liable to refund an amount of Rs. 45,93,793/- and the respondents are directed to refund the same. As far as the interest portion is concerned, this Court is leaving open to the parties to adjudicate the same.”

3. In view thereof, the Writ Petition is disposed of on the above terms. No costs. Consequently, connected miscellaneous petitions are closed.