Order Date – 19 December 2023

Parties: M/s. Virgo Polymers India Pvt. Ltd. Vs Commissioner of GST and Central Excise

Facts –

• The Appellant, M/s. Virgo Polymers India Pvt. Ltd., manufacturers of PP Woven Sacks and PP Fabric, had imported raw material, goods and machinery during May and June 2017. The transportation in vessel was arranged by the foreign shipping liner and freight charges were being paid on CIF basis.
• During the course of audit of the accounts, it was found that the Appellant had not paid service tax on such ocean freight paid on imports during May and June 2017 and on license fee paid to Government as recipient of service under Reverse charge basis. On being pointed out the appellant paid the Service tax.
• The appellant filed a refund claim so paid but the refund claim was rejected.

Issue –

• Whether Service Tax demand made on Ocean freight paid is justified?

Order –

• The Tribunal observed that the issue of Service Tax on Ocean Freight was the subject matter of dispute in the case of M/s. Asiatic Drugs  and Pharmaceuticals Vs. Commissioner of CGST Alwar [2022 (67) GSTL 473( Tri.-Del.)] it was held that the Appellant was entitled to refund claim of Service Tax along with interest and penalty paid. Hence it was held that the recovery of Service Tax on Ocean freight is not legally justified and hence the demand is not maintainable.
• Further Tribunal analyzed the issue regarding the issue of sanction of refund of Service Tax paid during the GST era in INDO TOOLING Pvt. Ltd. Vs. Commissioner, CGST & Central Excise, INDORE [2022 (61) G.S.T.L. 595 (Tri. - Del.)] wherein it was held as “from a conjoint reading of sub-sections (3), (5) and (8)(a) of the CGST Act, it is evident that an assessee is entitled to claim refund of service tax under RCM paid after the appointed day under the existing law and such claim has to be disposed of according to the provisions of the existing law. As the appellant was entitled to Cenvat credit of the said amount of Rs. 9,85,827/-, which is now no longer available due to GST regime, they are entitled to refund of the said amount.”
• Hence the rejection of refund claims cannot be justified. In view of the above findings, the impugned order is set aside and appeal is allowed.