2023 (9) TMI 1548 - HC - GST

Direction to respondent to dispose of the refund application - imposition of GST on Service and Freight - whether the imposition of GST on Service and Freight, when it has already suffered levy of customs duties was considered and the notification which had imposed GST was struck down, while that being so the respondents cannot state that the judgment is only in persona and not in rem? HELD THAT - The counter filed by the respondents stating that the judgment cannot be treated as In Rem , is total non-application of mind and misinterpretation, since the notification issued by the Government itself is struck down then the notification is not existence in the eye of law. In such circumstances the judgment is not in rem would not arise, since the respondents would not have power to impose GST. When there is no power to the respondents, then the imposition of GST is without any authority. The respondents further submitted that the refund application ought to be submitted within a period of 2 years, but in the present case the petitioners had submitted beyond the period two years. Since the issue was pending before various Courts subsequently, it has been settled by the Hon'ble Supreme Court, then the respondents cannot reject the plea of refund on the basis of limitation. Therefore, the respondents are directed to refund the claim and disburse the amount within a period of four (4) weeks from the date of receipt of a copy of this order. Petition allowed.

Summary

Issues:
Challenge to impugned order on GST refund; Imposition of GST on service and freight despite customs duties; Binding nature of Gujarat High Court judgment; Dismissal of revenue appeal by Supreme Court; Jurisdictional authority of Madras High Court; Refund application timeline.

Analysis:

The petitioner, a private limited firm with GST registration, challenged an order for GST refund in the High Court. The issue arose from the imposition of GST on service and freight, despite the goods already suffering customs duties. Reference was made to the Gujarat High Court judgment in Mohit Minerals Pvt. Ltd. vs. Union of India, where the notification imposing GST was struck down. The Hon'ble Supreme Court upheld this decision, emphasizing that a tax on a service already included in a tax on composite supply of goods is impermissible under GST legislation.

The High Court of Madras, following the Gujarat High Court and Supreme Court judgments, confirmed the invalidity of the notification imposing GST on service and freight. However, the respondents in the present case contended that the Gujarat High Court judgment was not binding on them, despite the Supreme Court's dismissal of the revenue appeal. The respondents argued that since the petitioner was not a party in the Supreme Court case, the judgment was not binding "In Rem." The petitioner countered this, asserting that the issue of GST imposition on service and freight, already subject to customs duties, had been conclusively addressed by the higher courts.

The respondents' claim that the judgment was not "In Rem" due to the absence of the petitioner in the Supreme Court case was deemed a misinterpretation. The petitioner highlighted that the struck-down notification rendered the imposition of GST without legal authority. Additionally, the respondents raised a procedural objection regarding the two-year timeline for refund applications. The petitioner argued that since the issue was sub judice and ultimately resolved by the Supreme Court, the limitation on the refund application should not be used to reject the claim.

Ultimately, the High Court allowed the Writ Petition, directing the respondents to refund the claim and disburse the amount within four weeks. The judgment emphasized the binding nature of the Gujarat High Court and Supreme Court decisions on the issue of GST imposition and the invalidity of the notification. No costs were awarded in the matter, and the miscellaneous petition was closed accordingly.