Case
Analysis: Indorama Industries Limited Case Vs. Union of India
Application
No. : CWP No. 1085 of 2019
Court:
High Court Of Himachal Pradesh
Date:
22.08.2022
Facts
of the Case:
The case in question involves Indorama
Industries Limited, a company situated at Plot No.10, Lodhi Majra, Baddi,
Himachal Pradesh. The company filed a petition against the Union of India and
the Goods and Services Tax (GST) Council. The petition, filed under Civil Writ
Petition No. 1085 of 2019, was heard on August 22, 2022, by Hon’ble Mr. Justice
Tarlok Singh Chauhan and Hon’ble Mr. Justice Virender Singh of the High Court
of Himachal Pradesh at Shimla.
Submissions
by the Petitioner:
Indorama Industries Limited sought several
reliefs from the court, primarily focusing on two key notifications:
1. Notification No. 8/2017-Integrated Tax
(Rate), dated June 28, 2017.
2. Notification No. 10/2017-Integrated Tax
(Rate), dated June 28, 2017.
The petitioner argued that these notifications
were unconstitutional and beyond the legislative competency of the authorities.
Specifically, they contended that:
·
The notifications
imposed a tax on services supplied by a person located in a non-taxable
territory to another person in a similar non-taxable territory by way of
transportation of goods by a vessel from a place outside India to the customs
station of clearance in India.
·
Such a levy violated
the Integrated Goods and Services Tax (IGST) Act, 2017.
·
They sought a refund
of IGST amounting to INR 114.00 Lakhs and interest of INR 6.29 Lakhs, deposited
under the said notifications, along with an allowance for Input Tax Credit of
IGST paid as an importer.
Submissions
by the Respondents:
The respondents, represented by Sh. Vir
Bahadur Verma, Central Government Standing Counsel for the Union of India, and
Sh. Vijay Kumar Arora, Advocate for the GST Council, acknowledged the
submissions of the petitioner. The respondents were asked to review the Supreme
Court judgment in the case of Union of India vs. M/s Mohit Minerals Pvt. Ltd.,
decided on May 19, 2022, which was cited as precedent by the petitioner's
counsel.
Judgment:
Upon hearing the submissions on August 22,
2022, the court, noting that the issues raised by the petitioner had already
been settled by the Supreme Court in the case of M/s Mohit Minerals Pvt. Ltd.,
agreed with the petitioner. The relevant portion of the Supreme Court judgment
specified that:
·
The Government's
rule-making power under the CGST and IGST Acts must adhere to the
recommendations of the GST Council, but these recommendations are not binding
on the legislature’s power to enact primary legislation.
·
The impugned levy on
the service aspect of the transaction violated the principle of composite
supply under Section 2(30) read with Section 8 of the CGST Act. The Indian
importer is liable to pay IGST on the composite supply, which includes goods
and services of transportation, insurance, etc., under a CIF contract.
Summary:
The High Court of Himachal Pradesh, applying
the Supreme Court’s ruling, allowed the petition by Indorama Industries
Limited. It directed the Union of India to refund the IGST amount along with
the applicable interest by November 30, 2022. The court's decision underscores
the importance of adhering to the principles laid down by the higher judiciary,
ensuring that the levy and collection of taxes are in strict compliance with
legislative provisions.
This ruling highlights the judicial oversight
on taxation matters, particularly in the context of the GST regime, providing
clarity on the application of tax laws and protecting the rights of taxpayers
against unconstitutional levies.
