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Gokul Agro Resources Ltd. v. Union of India
Factual and Procedural Background
This opinion arises from a writ application filed under Article 226 of the Constitution of India challenging Entry No. 10 of Notification No. 10/2017-IGST (Rate) dated 28-6-2017. The writ applicant contended that the impugned notification was ultra vires Section 5(3) of the Integrated Goods and Services Tax (IGST) Act and Article 14 of the Constitution. The applicant sought a declaration striking down the notification, a refund of IGST paid, interim relief restraining coercive action, and other consequential reliefs. The Court references a prior judgment in Mohit Minerals (P.) Ltd. v. Union of India, which had already declared the said notification ultra vires and unconstitutional. The applicant claims entitlement to refund IGST paid pursuant to the impugned notification, supported by a statement showing payment of IGST on ocean freight for the years 2017-18, 2018-19, and 2019-20.
Legal Issues Presented
- Whether Entry No. 10 of Notification No. 10/2017-IGST (Rate) dated 28-6-2017 is ultra vires Section 5(3) of the IGST Act and Article 14 of the Constitution of India.
- Whether the writ applicant is entitled to a refund of IGST paid pursuant to the impugned notification following its invalidation.
- The procedural question regarding the manner and authority to whom the refund application should be made and the obligation of the authority to consider it without raising technical objections.
Arguments of the Parties
Writ Applicant's Arguments
- The impugned Entry No. 10 of Notification No. 10/2017-IGST (Rate) is unconstitutional and beyond legislative competence.
- Having paid IGST under the invalid notification, the applicant is entitled to a refund along with interest.
- Pending final adjudication, coercive steps against the applicant should be restrained.
- The applicant seeks a writ directing the competent authority to grant the refund without raising technical objections.
Respondents' Position
- The learned standing counsel for the respondents waived service of notice of rule, indicating no opposition to the procedural aspects mentioned.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Mohit Minerals (P.) Ltd. v. Union of India | Declaration that Entry No. 10 of Notification No. 10/2017-IGST (Rate) dated 28-6-2017 is ultra vires Section 5(3) of the IGST Act and Article 14 of the Constitution; ocean freight is not taxable under IGST Act. | The Court relied on this precedent to hold that the impugned notification is unconstitutional and to dispose of the principal relief prayed for in the writ application. |
Court's Reasoning and Analysis
The Court recalled its earlier judgment in Mohit Minerals (P.) Ltd. v. Union of India, which conclusively held that the levy of IGST on ocean freight under the impugned notification was ultra vires the IGST Act and unconstitutional under Article 14. Given this binding precedent, the Court noted that the principal relief sought in the present writ application was effectively granted. The Court acknowledged the applicant's claim for refund of IGST paid pursuant to the struck down notification. However, it emphasized that the applicant must file a proper application before the competent authority for refund. The authority is directed to consider such application expeditiously, within four weeks, and to avoid raising any technical objections, keeping in mind the binding nature of the earlier judgment. This ensures procedural propriety while upholding the substantive right to refund.
Holding and Implications
The Court granted the principal relief by upholding the earlier decision that Entry No. 10 of Notification No. 10/2017-IGST (Rate) is ultra vires and unconstitutional. It directed that the writ applicant is entitled to seek refund of IGST paid under the invalid notification and mandated the competent authority to process such refund applications promptly and without technical impediments.
The direct consequence is that the applicant may recover IGST amounts paid erroneously under the struck down notification. No new precedent was established; the Court applied its prior ruling to the present facts and ensured procedural compliance for refund claims.
(PER : HONOURABLE MR.JUSTICE J.B.PARDIWALA) Rule returnable forthwith. Mr. Nirzar Desai, the learned standing counsel waives service of notice of rule for and on behalf of the respondents.
2. By this writ application under Article 226 of the Constitution of India, the writ applicant has prayed for the following reliefs: "19A. This Hon'ble Court may be pleased to issue a writ striking down and declaring Entry No. 10 of Notification No. 10/2017-IGST(Rate) dated 28-6-2017 as being ultra-vires Sectin 5(3) of the IGST Act as well as Article 14 of the Constitution of India. B. This Hon'ble Court may be pleased to issue a writ of mandamus directing the learned respondents to grant refund of the amount of IGST already paid by the petitioner pursuant to the impugned Entry No. 10 of Notification No. 10/2017-IGST (Rate) dated 28-6-2017 (as per statement at Annexure D) along with appropriate interest on such refund; C. Pending notice, admission and final hearing of this petition, this Hon'ble Court may be pleased to restrain the learned respondents from taking coercive steps against the petitioner on the basis of the impugned Entry No. 10 of Notification No. 10/2017-IGST(Rate) dated 28-6-2017; D. Ex parte ad interim relief in terms of prayer C may kindly be granted. E. 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."
3. This Court vide judgement and order passed in the case of Mohit Minerals (P.) Ltd. v. Union of India allied petitions declared the Entry No. 10 of the Notification No. 10/2017-Integrated Tax (Rate) dated 28th June 2017 as ultra vires Section 5(3) of the Integrated Goods and Services Tax Act, 2017 as well as Article 14 of the Constitution of India. We may quote paras 254 and 255 of the judgement rendered in the case of Mohit Minerals (P.) Ltd. (supra). Paras 254 and 255 read as under: "254. In view of the aforesaid discussion, we have reached to the conclusion that no tax is leviable under the Integrated Goods and Services Tax Act, 2007, on the ocean freight for the services provided by a person located in a non-taxable territory by way of transportation of goods by a vessel from a place outside India upto the customs station of clearance in India and the levy and collection of tax of such ocean freight under the impugned Notifications is not permissible in law.
255. In the result, this writ-application along with all other connected writ-applications is allowed. The impugned Notification No. 8/2017 - Integrated Tax (Rate) dated 28th June 2017 and the Entry 10 of the Notification No. 10/2017 - Integrated Tax (Rate) dated 28th June 2017 are declared as ultra vires the Integrated Goods and Services Tax Act, 2017, as they lack legislative competency. Both the Notifications are hereby declared to be unconstitutional. Civil Application, if any, stands disposed of."
4. Thus, the principal relief prayed for in this writ application now stands granted by virtue of the aforesaid decision of this Court. Mr. Uchit Sheth, the learned counsel pointed out that his client had deposited a particular amount of IGST and as the Notification has been struck down, his client is entitled to refund of the said amount of IGST. Mr. Sheth invited our attention to Annexure : 'D' to the paper book. Annexure : 'D' at page : 30 is a statement indicating payment of IGST on Ocean freight. The statement reads thus: GOKUL AGRO RESOURCES LTD STATEMENT SHOWING IGST PAID ON OCEAN FREIGHT TILL DATE Sl. No. Particulars Amount (Rs.) 2017-18 1,28,86,003 2018-19 3,02,47,487 2019-20 (Till November, 19) 3,37,89,514 Total 7,69,13,004
5. Mr. Sheth further pointed out that the authority concerned will not be in a position to examine the issue of refund of the amount towards IGST under the provisions of the Act. In such circumstances, Mr. Sheth seeks a writ from this Court to the authority for the purpose of refund.
6. We may only say that since the Notification has been struck down as ultra vires, as a consequence of the same, the writ applicant seeks refund of the amount paid towards the IGST. However, for this purpose, the writ applicant will have to prefer an appropriate application addressed to the competent authority. If any such application is preferred for the refund of the amount, the authority concerned shall immediately look into the same and pass an appropriate order in accordance with law keeping in mind the decision of this Court rendered in the case of Mohit Minerals (P.) Ltd. (supra). The competent authority shall not raise any technical issue with regard to the claim for refund of the IGST amount. Let this exercise be undertaken within a period of four weeks from the date of receipt of the writ of this order.
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