2024 (3) TMI 388 - HC - GST

Refund of ocean freight paid under protest - unconstitutional levy or not - Rejection on the ground that refund as a result of levy being held unconstitutional can be claimed only by way of suit or writ petition and that the same cannot be granted under Section 54 of the GST Act - HELD THAT - The petitioner is entitled to the refund of ocean freight paid under protest in view of the decision of the Apex Court in case of UNION OF INDIA ANR. VERSUS M/S MOHIT MINERALS PVT. LTD. THROUGH DIRECTOR 2022 (5) TMI 968 - SUPREME COURT since the impugned Notification has already been declared as ultra vires and accordingly, the present petition deserves to be allowed. The claim for refund of the petitioner towards ocean freight is required to be favourably considered and respondent No. 2 is directed to verify the amount of refund and grant such refund of the amount of IGST paid on ocean freight by the petitioner pursuant to the Entry No. 10 of the above notification within eight weeks from the date of receipt of copy of this order along with the statutory rate of interest. Petition allowed.

Summary

Issues Involved:
1. Refund of GST amount paid under protest on ocean freight due to unconstitutional levy.

Summary:
The petitioner, engaged in the business of manufacturing and sale of textile machinery, filed a petition seeking a refund of GST amount paid on ocean freight under protest, along with interest and penalty. The petitioner contended that the levy of IGST on ocean freight was declared unconstitutional by the Supreme Court in a previous case. The respondent authority rejected the refund claim, stating that it could only be granted through a suit or writ petition, not under Section 54 of the GST Act.

The High Court held that once the Supreme Court declares a notification unconstitutional, it becomes the law of the land and must be followed by the authorities. The respondent authority was bound by the Supreme Court's decision and could not reject the refund claim based on the grounds that it fell outside the scope of Section 54 of the CGST Act. The petitioner had not passed on the tax burden, as confirmed by a certificate from a Chartered Accountant, thus unjust enrichment did not apply. The Court also referenced previous decisions supporting the petitioner's claim for refund.

Accordingly, the High Court directed the respondent authority to verify and grant the refund of the IGST paid on ocean freight by the petitioner within eight weeks, along with statutory interest. The petition was allowed in favor of the petitioner.