2023 (4) TMI 423 - HC - GST

Liability of IGST is imposed on the Petitioner on the amount of ocean freight charges - Constitutional validity of N/N. 10/2017- Integrated Tax (Rate) dated 28.06.2017; (2) Notification No. 8/2017-Integrated Tax (Rate) dated 28.06.2017 read with Corrigendum dated 30.06.2017; and (3) Rule 13(9) of the Integrated Goods and Services Tax Act, 2017 - Place of Provision Rules - constitutional validity of Sections 68(2) and Section 66 of the Finance Act, 1994 - recovery of Service Tax / IGST on the amount of ocean freight charges from the Petitioner. HELD THAT - Insofar as the levy of tax under IGST is concerned, concededly, the same is covered in favour of the petitioner by the decision of the Hon ble Supreme Court in UNION OF INDIA ANR. VERSUS M/S MOHIT MINERALS PVT. LTD. THROUGH DIRECTOR 2022 (5) TMI 968 - SUPREME COURT where it was held that The impugned levy imposed on the service aspect of the transaction is in violation of the principle of composite supply enshrined under Section 2(30) read with Section 8 of the CGST Act. Since the Indian importer is liable to pay IGST on the composite supply , comprising of supply of goods and supply of services of transportation, insurance, etc. in a CIF contract, a separate levy on the Indian importer for the supply of services by the shipping line would be in violation of Section 8 of the CGST Act. Levy of Service tax - HELD THAT - The learned counsel for the petitioner states that an Enquiry Notice was issued but no further action has been taken by the Department for levy of service tax - Petitioner submits that the present petition be disposed of with liberty for the petitioner to challenge the levy of service tax on ocean freight in the event, any further action is taken by the concerned Department for assessing or recovering any such levy. The present petition is disposed of with liberty to the petitioner to apply afresh in the event any steps are taken by the respondents for assessing or recovering service tax on ocean freight.

Summary

Issues:
The issues involved in the judgment are the challenge against the imposition of IGST and service tax on ocean freight charges, the vires of various notifications, rules, and acts, excessive delegation to the Executive, and the quashing of certain letters and circulars.

Challenge Against IGST:
The petitioner sought a writ declaring the imposition of IGST on ocean freight charges ultra vires, citing violations of Article 14 and Article 265 of the Constitution of India and relevant tax acts. The court noted that the issue of IGST levy was already decided in favor of the petitioner by the Supreme Court in a previous case, thus ruling in favor of the petitioner on this aspect.

Challenge Against Service Tax:
Regarding the imposition of service tax on ocean freight charges, the petitioner raised concerns about the validity of various notifications and rules. The petitioner's counsel mentioned that while an Enquiry Notice was issued, no further action had been taken by the Department for the levy of service tax. The court disposed of the petition with liberty for the petitioner to challenge the levy of service tax if any further action is taken by the Department.

Excessive Delegation and Quashing of Letters:
The petitioner also challenged the constitutionality of Sections 68(2) and Section 66 of the Finance Act, 1994, alleging excessive delegation to the Executive. Additionally, the petitioner sought the quashing of a specific letter dated 06.11.2018 related to Service Tax and IGST on ocean freight charges. The court did not provide specific rulings on these aspects in the judgment.

Disposition:
The court disposed of the petition, granting liberty to the petitioner to reapply if the Department takes steps for assessing or recovering service tax on ocean freight charges in the future. Pending applications were also disposed of as part of the judgment.