No Additional Interest on Refund of IGST Paid on Ocean Freight as ITC Had Already Been Availed and Utilized | HC

Case Details: South India Krishna Oil and Fats (P.) Ltd. v. Assistant Commissioner of GST-Central Tax Central Excise - [2024] 167 taxmann.com 513 (Madras)

Judiciary and Counsel Details

• C. Saravanan, J.
• T. Shanmugam, for the Petitioner.
• N. Dilip Kumar, Sr. Standing Counsel & K. Prabhu, Jr. Standing Counsel for the Respondent.

Facts of the Case

The petitioner, a supplier of goods, paid IGST on ocean freight under reverse charge mechanism. The tax was paid before the decision of the Supreme Court which held that the levy of IGST on such ocean freight was unconstitutional. After the said decision, the petitioner filed a refund claim for the tax paid on ocean freight along with interest from the date of payment of tax. The refund claim was duly processed but it filed writ petition to grant interest at 6% from the date of payment of tax to the Department.

High Court Held

The Honorable High Court noted that the petitioner was liable to pay tax on the supplies and therefore the credit would have been utilized by the petitioner for discharging the tax liability of the petitioner. Although the petitioner shall not be held liable to pay tax on reverse charge basis but the refund interest is to be paid strictly under Sections 56 and 57 of the CGST Act.

Therefore, the petitioner cannot claim any interest on the tax since the amount that was paid by the petitioner on ocean freight would have been availed as Input Tax Credit and utilized then and there. Therefore, the petitioner was not entitled to a refund claim, much less interest.

List of Cases Referred to

• Comsol Energy (P.) Ltd. v. State of Gujarat [2021] 127 taxmann.com 736/55 GSTL 390 (Gujarat) (para 4),
• State of Madhya Pradesh v. Bhailal Bhai and others AIR 1964 SCC 1006 (para 5),
• Union of India v. Tata Chemicals Limited (2014) 6 SCC 335 (para 6),
• ADI Enterprises v. Union of India [2022] 143 taxmann.com 47/94 GST 866/64 GSTL 392 (Gujarat) (para 8),
• Dreyfus Company India Private Limited v. Union of India 2022 (65) G.S.T.L. 261 (Guj.) (para 8)
• Union of India v. Mohit Minerals (P.) Ltd. [2022] 138 taxmann.com 331/92 GST 101/61 GSTL 257 (SC) (para 17).