In a significant ruling, the Gujarat High Court addressed the issue of refund of Integrated Goods and Services Tax (IGST) paid on ocean freight by S.N. Tradelink Pvt. Ltd. The petitioner sought a refund following the Supreme Court’s decision in Union of India v. Mohit Minerals Pvt. Ltd., which declared the levy unconstitutional. Despite submitting a Chartered Accountant certificate to confirm the tax burden was not passed on, the refund application faced rejection from the department on grounds of limitation, utilization of IGST credit, and ineligibility under Section 54(3) of the CGST Act.
The petitioner contended that the limitation under Section 54 was inapplicable as the tax was collected under an unconstitutional levy. Furthermore, they sought to rectify the GSTR-3B to reverse the credit utilization. During the proceedings, the petitioner filed Form DRC-03 to reverse the utilized credit, which the authorities verified and accepted.
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The High Court ruled that the rejection of the refund was unjustified, particularly after the reversal of credit and in light of the Supreme Court’s ruling in the Mohit Minerals case. Consequently, the orders rejecting the refund were quashed, and the authorities were instructed to issue a fresh order granting the refund within 12 weeks, taking into account the Supreme Court's decision and the petitioner’s credit reversal. The petition was resolved without any order as to costs.
Order date: 26 Sept 2025
Parties: S.N. Tradelink Pvt. Ltd. v. State of Gujarat & Ors.
Facts –
- The petitioner filed refund applications for IGST paid on ocean freight, following the Supreme Court’s decision in Union of India v. Mohit Minerals Pvt. Ltd. (2022), which held the levy unconstitutional.
- Refund was sought along with a Chartered Accountant certificate confirming that the tax burden was not passed on.
- The department issued show-cause notices proposing rejection on grounds of limitation, utilization of IGST credit, and ineligibility under Section 54(3) of the CGST Act.
- The petitioner argued that limitation under Section 54 did not apply where tax was collected under an unconstitutional levy. It also sought rectification of GSTR-3B to reverse credit utilisation. During proceedings, the petitioner filed Form DRC-03 reversing the utilized credit, which was verified and accepted by the authorities.
Issue –
- Whether refund of IGST paid on ocean freight could be denied on grounds of limitation or prior utilization of credit, despite the Supreme Court having struck down the levy as unconstitutional?
Order –
- The High Court held that rejection of refund was unjustified, especially after reversal of credit and in view of the Supreme Courts Mohit Minerals ruling.
- Orders rejecting refund were quashed and set aside.
- Authorities were directed to pass a fresh de novo order granting the refund within 12 weeks, considering the Apex Court’s decision and the petitioner’s credit reversal.
- Petition was disposed of with no order as to costs.
