The Hon’ble Gujarat High Court has recently in the case of Bharat Oman Refineries Ltd. v. Union of India & 1 other(s) [R/Special Civil Application No. 8881 of 2020 has allowed the Petition for refund of GST paid on ocean freight under reverse charge mechanism, directing the Revenue to grant refund of the amount of IGST paid under the IGST Act, 2017 by the Petitioner pursuant to Entry No. 10 of Notification No.10/2017-IGST (Rate) dated July 28, 2017 (“RCM Notification”).
The direction for refund of IGST along with interest has been issued in view of earlier judgment of Gujarat High Court wherein levy of IGST under reverse charge on ocean freight was declared to be ultra vires.
Facts of the case:
Bharat Oman Refineries Ltd. (“the Petitioner”) filed a writ petition before the Hon’ble Gujarat High Court challenging applicability of GST on Ocean Freight and to grant refund of the amount of IGST already paid by the petitioner pursuant to Entry No. 10 of RCM Notification along with appropriate interest on such refund.
Issue involved:
Whether the Petitioner can be granted interim relief from the payment of IGST and refund of the IGST paid on Ocean Freight?
Order of Gujarat High Court: Ruling
The Hon’ble Gujarat High Court held as under:
- The RCM Notification was a subject matter of challenge in a batch of writ applications, the lead matter being the Mohit Minerals (P.) Ltd. v. Union of India [Special Civil Application No.726 of 2018 dated January 23, 2020]. This Court in Mohit Minerals and allied petitions declared the Notification No. 8/2017-Integrated Tax (Rate) dated June 28, 2017 and Entry No. 10 of the RCM Notification as ultra vires the IGST Act, 2017 on the ground that the same lacked legislative competency.
- Therefore, the Court directed the Respondents to sanction the refund and refund the requisite amount of IGST already paid by the Petitioner pursuant to the Entry No. 10 of RCM Notification declared to be ultra vires by this Court.
- Further, the Court in its order stated that the Respondents shall undertake the process of refunding the requisite amount of IGST at the earliest and see to it that the same is paid to the Petitioner within a period of six weeks from the date of receipt of this order.
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