It started when The Division Bench of Hon’ble Gujarat High Court vide its judgment in the case of MOHIT MINERALS PVT LTD Versus UNION OF INDIA & 1 OTHER – 2020 (1) TMI 974 – GUJARAT HIGH COURT] declared Entry No.10 of Notification No.10/2017-IGST (Rate) dated 28.6.2017 as ultra vires the Act.
Given its ruling in the Mohit Minerals case, the case was further appealed before the Supreme Court, which held that 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 (Cost Insurance Freight) contract, a separate levy on the Indian importer for the ‘supply of services’ by the shipping line would violate the CGST Act.
Refund of the already paid amount i.e. Tax on the ‘Ocean Freight Component’ on CIF Imports?
Now after the judgment, recently vide the judgment in the case of ADI ENTERPRISES VERSUS UNION OF INDIA 2022 (6) TMI 849, Gujarat High Court allowed the writ petition directing the authorities to pay back the amount which was already paid.
Pass the Test of The doctrine of unjust enrichment
Thus, as per the principles of the Landmark Judgement in the case of Mafatlal Industries Ltd. vs. Union of India, (1997) 5 SCC 536, “Unjust enrichment” A volatile and elusive judge-made hypothesis till the other day, became a hard and inescapable reality on the statute-book in India in 1991 when Parliament accepted it and enacted the Central Excises and Customs Law (Amendment) Act, 1991. The amendments required every assessee seeking a refund of an illegally recovered tax to prove that he had not passed on the burden of the tax to the customer or any other person for one who had passed on the burden would not be entitled to the refund of money himself.
Though Mafatlal touches upon multiple aspects, we confine ourselves to this perspective only.
Way Forward on filing the refund application!
Considering the above principles, the importers who have paid said ‘amount’ as a tax component, may analyze the see the applicability of “Unjust enrichment’ on the amount paid as ‘IGST’ and can apply for the refund accordingly as per the legal principles.
In case of any assistance/queries, feel free to reach at navjot.singh@taxtru.in or +91 99533 57999
Source: https://www.linkedin.com/pulse/claiming-refund-amount-paid-igst-ocean-freight-cif-shipments-singh
‘The Décoder’ is an initiated of Taxtru in Linkedin.com It is an idea that evolved after observing the dynamics of the tax laws. We all have seen multiple changes in the tax laws from time to time, now changes lead to ambiguities. In order to mitigate the issues, we provide a platform to discuss the same with eminent professionals.
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