Rajasthan High Court

M/S Pernod Ricard India Pvt. Ltd vs Union Of India (2024:Rj-Jp:1948-Db) on 11 January, 2024

Bench: Manindra Mohan Shrivastava, Shubha Mehta

[2024:RJ-JP:1948-DB]

            HIGH COURT OF JUDICATURE FOR RAJASTHAN
                        BENCH AT JAIPUR

                       D.B. Civil Writ Petition No. 11270/2021

M/s Pernod Ricard India Pvt. Ltd., Through Its Authorised Signatory
Saurabh Khandelwal S/o Mohan Lal Khandelwal Village Karora, Tehsil-
Behror, Alwar, Rajasthan-301702
                                                                          ----Petitioner
                                            Versus
1.        Union Of India, Through Its Secretary (Revenue) Ministry Of
          Finance, Department Of Revenue, Government Of India, North
          Block, New Delhi-110001
2.        Central Board Of Indirect Taxes And Customs, Through Its
          Chairman, North Block, New Delhi- 110001
3.        Gst Council, Through Its Chairperson Ministry Of Finance, North
          Block New Delhi-110001
4.        Chief Commissioner, Central Goods And Services Tax, Jaipur
          Zone, New Central Revenue Building, Statue Circle, C Scheme,
          Jaipur-302005.
5.        Assistant Commissioner, Central Goods And Services Tax
          Division E-Behror, Alwar
                                                                       ----Respondents


For Petitioner(s)               :     Mr. Mohit Kumar Saini
                                      Mr. Yuvraj Singh through VC
For Respondent(s)               :     Mr. Sourabh Jain on behalf of
                                      Mr. Kinshuk Jain



HON'BLE THE ACTING CHIEF JUSTICE MR. MANINDRA MOHAN SHRIVASTAVA
                       HON'BLE MRS. JUSTICE SHUBHA MEHTA

                                            Order

11/01/2024

1.    This writ petition has been filed by the petitioner seeking the

following reliefs:-

      "A. Issue a writ, order, or direction to quash the impugned
      S.No. 10 of Notification No.10/2017 - Integrated Tax (Rate)
      dated 28.06.2017 - (Annexure-3); and/or



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      B. Issue a writ, order or direction to quash the impugned
      S.No.9(ii) of Notification No.8/2017 Integrated Tax (Rate)
      dated 28.06.2017 (Annexure-4); and/or
      C. Issue a writ, order or direction to quash the impugned
      OIA    No.    99(MAA)CGST/JPR/2021          dated   05.05.2021
      (Annexure-12); and/or
      D. Issue a writ, order or direction to quash the impugned
      Refund Rejection Order dated 13/07/2020 (Annexure-11);
      and/or
      E. Issue a writ, order or direction, directing the Respondents
      to allow with interest and consequential relief the refund of
      Rs.3,13,908/-;
      F. Issue a writ, order or direction, directing the Respondents
      to allow the interest of Rs.26,397/- which is the interest paid
      while making the payment of tax of Rs. 3,13,908/-;
      G. Issue any other writ order or direction, which this Hon'ble
      Court may deem fit and proper under the facts and
      circumstances of the present case;
      H. Grant costs and interest; and
      I. Grant such further and other reliefs as the nature and
      circumstances of the case may require."

2.    It is submitted by learned counsel for the petitioner that the issue

raised in this petition is squarely covered by judgment of Hon'ble

Supreme Court in Union of India Vs. Mohit Minerals (Pvt.) Limited :

(2022) 10 SCC 700, wherein, from the indication made in para 169 to

171, the reliefs as claimed by the petitioner would be available.

3.    The submissions made by counsel for the petitioner are not

disputed by learned counsel for the respondents.

4. In the case of Mohit Minerals (supra), Hon'ble Supreme Court,

inter alia observed and directed as under:-

"169. The High Court in the impugned judgment has observed that:

"What has led to the present day problems in the implementation of the GST:

133. The GST is implemented by subsuming various indirect taxes. The difficulty which is being experienced today in proper implementation of the GST is because of the erroneous misconception of law, or rather, erroneous assumption on the part of the delegated legislation that service tax is an

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independent levy as it was prior to the GST and it go vivisect the transaction of supply to levy more taxes on certain components completely overlooking or forgetting the basic concept of composite supply introduced in the GST legislation and the very idea of levying the GST. Prima facie, it appears that while issuing the impugned notification, the delegated legislature had in mind the provision of the Finance Act, 1994, rather than keeping in mind the object of bringing the GST by making the Constitutional (101st) Amendment Act,2016 to merge all taxes levied on the goods and services to one tax known as the GST.

134. It appears that despite having levied and collected the integrated tax under the IGST Act,2017, on import of goods on the entire value which includes the Ocean Freight through the impugned notifications, once again the integrated tax is being levied under an erroneous misconception of law that separate tax can be levied on the services components (freight), which is otherwise impermissible under the scheme of the GST legislation made under the CA Act, 2016.

135. All the learned senior counsel are right in their submission that if such an erroneous impression is not corrected and if such a trend continues, then in future even the other components of supply of goods, such as, insurance,packaging, loading/unloading, labour, etc. may also be artificially vivisected by the delegated legislation to once again levy the GST on the supply on which the tax is already collected.

Xxxx xxxx xxxx xxxx

216. Thus, having paid the IGST on the amount of freight which is included in the value of the imported goods, the impugned notifications levying tax again as a supply of service, without any express sanction by the statute, are illegal and liable to be struck down."

170. We are in agreement with the High Court to the extent that a tax on the supply of a service, which has already been included by the legislation as a tax on the composite supply of goods, cannot be allowed.

E. Conclusion

171. Based on the above discussion, we have reached the following conclusion:

171.1. The recommendations of the GST Council are not binding on the Union and States for the following reasons:

171.1.1. The deletion of Article 279-B and the inclusion of Article 279(1) by the Constitution Amendment Act2016 indicates that the Parliament intended for the recommendations of the GST Council to only have a persuasive value, particularly when interpreted alongwith the objective of the GST regime to foster

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cooperative federalism and harmony between the constituent units;

171.1.2. Neither does Article 279-A begin with a non-obstante clause nor does Article 246-A state that it is subject to the provisions of Article 279-A. The Parliament and the State legislatures possess simultaneous power to legislate on GST.

Article 246-A does not envisage are pugnancy provision to resolve the inconsistencies between the Central and the State laws on GST. The"recommendations" of the GST Council are the product of a collaborative dialogue involving the Union and States. They are recommendatory in nature. To regard them as binding edicts would disrupt fiscal federalism, where both the Union and the States are conferred equal power to legislate on GST. It is not imperative that one of the federal units must always possess a higher share in the power for the federal units to make decisions. Indian federalism is a dialogue between cooperative and uncooperative federalism where the federal units are at liberty to use different means of persuasion ranging from collaboration to contestation; and

171.1.3. The Government while exercising its rule-making power under the provisions of the CGST Act and IGST Act is bound by the recommendations of the GST Council. However, that does not mean that all the recommendations of the GST Council made by virtue of the power Article 279A (4) are binding on the legislature's power to enact primary legislations;

171.2. On a conjoint reading of Sections 2(11) and 13(9)of the IGST Act, read with Section 2(93) of the CGST Act the import of goods by a CIF contract constitutes an "inter-state" supply which can be subject to IGST where the importer of such goods would be the recipient of shipping service;

171.3. The IGST Act and the CGST Act define reverse charge and prescribe the entity that is to be taxed for these purposes. The specification of the recipient - in this case the importer - by Notification 10/2017 is only clarificatory. The Government by notification did not specify a taxable person different from the recipient prescribed in Section 5(3) of the IGST Act for the purposes of reverse charge;

171.4. Section 5(4) of the IGST Act enables the Central Government to specify a class of registered persons as the recipients, thereby conferring the power of creating a deeming fiction on the delegated legislation;

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171.5. The impugned levy imposed on the 'service' aspect of the transaction is in violation of the principle of' composite supply' enshrined under Section 2(30) read with Section 8 of the CGST Act. Since the Indian importer is liable to pay IGST on the 'composite supply',comprising of supply of goods and supply of services of transportation, insurance, etc. in a CIF contract, a separate levy on the Indian importer for the 'supply of services' by the shipping line would be in violation of Section 8 of the CGST Act."

5. In view of the submissions made, the writ petition filed by the

petitioner is disposed of in the light of the judgment in the case Mohit

Minerals (supra).

6. The petitioner would be entitled to refund of the IGST paid by it.

Needful be done by the respondents within a period of six weeks from

the date of this order, in accordance with law.

(SHUBHA MEHTA),J (MANINDRA MOHAN SHRIVASTAVA),ACTING CJ

Naval Kishore-RAHUL/64