The Delhi High Court has allowed the service tax refund on ocean freight, as the levy of service tax on ocean freight was declared unconstitutional.
The bench of Justice Yashwant Varma and Justice Dharmesh Sharma has observed that where the refund is claimed consequent to a declaration of invalidity having been rendered, it would clearly fall outside the purview of the principal enactment and could be claimed either by way of suit or by way of a writ petition.
The petitioners/assessee instituted the instant writ petitions seeking the issuance of a writ of mandamus commanding the respondents to refund the service tax paid by them on ocean freight during the period April 2017 to June 2017.
The petitioners contended that in international trade and where the subject matter be a Cost, Insurance and Freight1 contract, the overseas supplier would engage a vessel owner for transportation of goods to India.
The appointment of the vessel as well as payment of transportation charges are borne by the overseas supplier. It is these transportation charges incurred in transporting goods by a vessel or ship which is commonly known as ocean freight. In the case of a Free On Board contract, the solitary distinction is that the ocean freight liability is to be borne by the local importer.
By virtue of the provisions contained in the Finance Act, 1994 and the amendments made therein which came into effect from 01 July 2012, a list of negative services came to be collated and which was ordained to be not taxable.
The effect of that list of negative services was that except for those services, others were made taxable. The service of transportation of goods by an aircraft or vessel came to be placed in the negative list in terms of the provisions contained in Section 66D(p)(ii) of the 1994 Act.
The clause, however, came to be omitted with effect from 01 June 2016. Accordingly, services by way of transportation of goods by an aircraft or vessel from a place outside India up to customs stations of clearance became chargeable to service tax with effect from 01 June 2016.
The department resisted the refund claim on the ground that on the basis of Section 11B of the Central Excise Act, 1944 and which stands adopted under the 1994 Act. The prayer for refund for the period April 2017 to June 2017 has been raised for the first time by the writ petitioners by way of the present action and is thus not only barred in light of the limitation as erected in terms of Section 11B of the Central Excise Act but even otherwise in light of the provisions of the Limitation Act, 1963, which would apply.
The court held that the mandate of the Supreme Court and which clearly and in unequivocal terms excludes the period between 15 March 2020 and 28 February 2022, it would be wholly incorrect for the respondents to urge that the claim of the petitioners is barred by limitation when computed in light of Section 17(1)(c) of the Limitation Act.
Case Details
Case Title: Tavrur Oils And Fats Pvt Ltd Versus Commissioner Central Goods And Service Tax & Anr.
Case No.: W.P.(C) 17146/2022 & CM APPL. 41496/2023
Date: 18/12/2024
Counsel For Petitioner: Rajat Mittal
Counsel For Respondent: R. Ramachandran
