The Madhya Pradesh High Court has ruled in favor of Arinsun Clean Energy Pvt. Ltd., directing the refund of IGST paid on ocean freight under reverse charge for CIF imports. This decision follows the Supreme Court's judgment in the Mohit Minerals case, which declared the levy unconstitutional. Arinsun Clean Energy had imported solar photovoltaic modules in the fiscal year 2018-19 and paid IGST based on Notification No. 10/2017. Subsequently, they sought a refund of ₹26.19 lakh in tax and ₹2.26 lakh in interest, but the department initially rejected the claim.
The department argued that the notification imposing IGST on ocean freight remained valid until its deletion in October 2023. However, the High Court emphasized that the Supreme Court's ruling in Union of India v. Mohit Minerals Pvt. Ltd. had already rendered the levy invalid, as it was unconstitutional to impose IGST on ocean freight under reverse charge for CIF contracts. The Court dismissed the department's stance that the deletion of the notification was prospective, affirming that the tax collected could not be retained once the levy was declared illegal.
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Consequently, the High Court ordered the refund of the IGST and interest to Arinsun Clean Energy, reinforcing the Supreme Court's decision and ensuring compliance with the established legal precedent.
Order Date - 19 February 2026
Parties: ARINSUN CLEAN ENERGY PVT LTD ARINSUN CLEAN ENERGY PVT LTD Vs THE STATE OF MADHYA PRADESH AND OTHERS
Facts -
- Arinsun Clean Energy Pvt. Ltd., a company engaged in generation and sale of electricity, imported solar photovoltaic modules during FY 2018-19 and paid IGST on ocean freight under reverse charge as required by Notification No. 10/2017.
- Later, relying on the Gujarat High Court decision in Mohit Minerals, the petitioner filed a refund application for ₹26.19 lakh (tax) and ₹2.26 lakh (interest) paid in June 2019.
- The department rejected the refund, stating the notification imposing IGST on ocean freight remained valid until its deletion in October 2023.
- After an earlier writ resulted in remand for reconsideration, the authorities again rejected the claim, leading the petitioner to approach the High Court.
Issue -
- Whether IGST paid on ocean freight under reverse charge for CIF imports is refundable after the Supreme Court declared the levy invalid in the Mohit Minerals case?
Order -
- The Court noted that the Supreme Court in Union of India v. Mohit Minerals Pvt. Ltd. held that IGST on ocean freight under reverse charge is unconstitutional, as import of goods under CIF contracts is a composite supply.
- Once the notification imposing such levy was declared invalid, the tax collected under it could not be retained by the government.
- The department’s argument that the notification was deleted only prospectively from 01-10-2023 was rejected because the Supreme Court’s judgment already settled the illegality of the levy.
- Accordingly, the Court directed the refund of the IGST and interest paid by the petitioner.
