The court affirmed that an unlawful tax collection obligates the government to refund with interest, reinforcing the principle of unjust enrichment and constitutional mandates under Article 265.

JUDGMENT :

(Per Advait M. Sethna, J.)

1. The Petitioner has approached this Court by filing the present Petition under Article 226 of the Constitution of India praying for the following substantive reliefs which read thus: -

“a) that this Hon'ble Court be pleased to issue a Writ of Certiorari or a writ in the nature of Certiorari or any other writ, order or direction under Article 226 of the Constitution of India calling for the records pertaining to the Petitioner's case and after going into the validity and legality thereof to quash and set aside impugned order dated 31.01.2023 issued in FORM GST RFD-06 by Respondent No. 2 to the extent it rejects the claim of interest of Rs. 71,31,225/-.

(b) that this Hon'ble Court be pleased to issue a writ of Mandamus or a writ in the nature of Mandamus or any other writ or order or direction under Article 226 of the Constitution of India ordering and directing the Respondents by themselves and/or their officers and/or subordinates to forthwith grant and sanction interest of Rs. 71,31,225/- to the Petitioner.”

2. Rule. Rule is made returnable forthwith by the consent of the parties. We have heard Mr. Sanghavi for the Petitioner and Mr. Mishra for the respondents and with their assistance we have perused the record.

Factual matrix

3. The facts, in brief, necessary for adjudicating this Petition are set out below:-

4. The Petitioner is a company incorporated under the Companies Act, 1956, engaged in the import of palm oil (crude and refined) for trading in India.

5. The Petitioner was fastened with the liability to pay Integrated Goods and Services Tax (“IGST”) on reverse charge basis in terms of notification No.8 of 2017-Integrated Tax (Rate) read with notification No.10/2017-Integrated Tax (Rate) and corrigendum dated 30 June 2017 to the said notification No.8 of 2017 by the respondents. The petitioner paid IGST of INR 2,62,37,558/- during the period of July 2017 to April 2019, on ocean freight for the goods imported at the ports, by the Petitioner, in the State of Maharashtra.

6. The Petitioner on 10 July 2019 filed Writ Petition No.8318 of 2019 in this Court challenging the notification No.8 of 2017 and 10 of 2017 (supra) respectively. The Petitioner assailed such notifications being contrary to Section 5 (3) of the IGST Act and beyond the legislative competence of the respondents to issue the said notifications (supra).

7. This Court by an order dated 10 August 2022, inter alia in the case of the Petitioner held and declared that serial No.10 of the said notifications (supra) read with the corrigendum dated 30 June 2017 (supra) to the said notification No.8 of 2017 (supra) were unconstitutional to the extent they sought to levy IGST on ocean freight. The Court by the said order also directed the respondents to refund the amount of IGST along with applicable interest thereon, in accordance with law.

8. The Petitioner by a letter/communication dated 30 September 2022 requested Respondent No.3 to grant refund of IGST of Rs.2,62,37,558/- paid by them on ocean freight, under reverse charge mechanism, along with interest thereon.

9. Pursuant to the above, it was by a communication dated 17 October 2022 that the Respondent No.2 directed the Petitioner to file a refund application on common portal.

10. The Petitioner, on 15 December 2022 filed about 20 refund applications pursuant to the directions of Respondent No.2, which were withdrawn on 21 December 2022 by the Petitioner being filed under the wrong category.

11. The Petitioner o