No GST Is Leviable on Ocean Freight Services, Reiterates Madras High Court

The Madras High Court reiterated that the levy of GST on Ocean Freight Services was ultra vires and therefore not enforceable.

In this case, the Bench of Justice Mohammed Shaffiq was hearing a Writ Petition to quash two orders: one in appeal dated December 3, 2021, and another for rectification dated June 28, 2022, issued by the second and third respondents. The petitioner sought the immediate sanction and refund of ₹13,147, along with appropriate interest for the month of July 2019.

Both the petitioner's and respondents' counsel agreed that the issue had already been resolved by the Supreme Court in a 2022 judgment, which upheld a Gujarat High Court decision. The judgment struck down the levy of GST on Ocean Freight Services under specific notifications from 2017.

The High Court held that the issue of levying GST on Ocean Freight Services was already settled by the Gujarat High Court in the case of Mohit Minerals v. Union of India. In that case, the Court struck down the relevant notifications imposing GST on such services, deeming them ultra vires to section 8 of the CGST Act and section 5(3) of the IGST Act. This judgment was subsequently upheld by the Supreme Court, which dismissed the Department's appeal.

Given this precedent, the Court in the present case found that the respondents were not empowered to collect GST on Ocean Freight Services and were therefore required to refund the amount collected. The Court directed the respondents to refund ₹45,93,793/- to the petitioner, leaving the issue of interest to be adjudicated separately. Consequently, the Writ Petition was disposed of, and all connected miscellaneous petitions were closed.

Cause Title: Viterra India Pvt Ltd. vs The Union of India & Ors.

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