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Gujarat High Court orders IGST refund on Ocean Freight Within 6 Weeks

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AHMEDABAD : Following a Supreme Court verdict, the Gujarat High Court has directed the GST department to grant refund of tax paid on ocean freight within six weeks. Experts say this ruling is beneficial on two counts – first, defines a time-bound refund settlement process for GST on ocean freight and, second, provides clarity on sectors that are outside GST or under the inverted duty structure.

The Gujarat High court has directed the Central Board of Indirect Taxes and Customs to grant refund of goods and services tax paid on ocean freight within six weeks with interest, in a relief for importers. Refund claims worth ₹1,000 crore are pending,

Many importers had filed the refund claims after the Supreme Court order, but their claims are stuck.“It is directed that if any IGST amount is collected, the same shall be refunded within six weeks along with statutory rate of interest,” Justice NV Anjaria said, while admitting the petition by Louis Dreyfus Company India Pvt Ltd Vs Union of India. The order added that in the Supreme Court decision in Mohit Minerals Pvt. Ltd. (supra), since the impugned Notifications have already been declared as ultra vires, present petition deserves to be allowed. Meanwhile, CBIC officials said that the Department is yet to get a direction as the Finance Ministry had sought a legal opinion over the Supreme Court Order and legal review is still under process. Only when the Ministry will commence the legal review, the Tax Department can initiate the process of refunds. Without the direction, they cannot process claims, which have reached over Rs 1,000 crore.

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