WP(C) No.11618 of 2024 Page 1 of 59

ORISSA HIGH COURT : CUTTACK

W.P.(C) No.11618 of 2024

In the matter of an Application under Articles 226 and 227

of the Constitution of India, 1950

***

M/s. Paradeep Phosphates Limited,

a Company registered under the

Companies Act, 1956

Represented by

Joint General Manager (F & A)

M/s. Sibasis Samantara,

aged about 49 years,

Son of T Padmanabha Samantara

At: Plot No.1976/13,

Ratha Road, Old Town,

Lingaraj, Old Town, Khordha,

Odisha–751002. … Petitioner

-VERSUS-

1. Additional Commissioner

Goods and Services Tax (Appeals)

Central Revenue Building, Rajaswa Vihar,

Bhubaneswar–751 007

District: Khordha, Odisha.

2. Assistant Commissioner,

Central Goods and Services Tax

Cuttack-II Division, Cuttack

At: Plot No. C-12, Sector-6

CDA, Abhinav Bidanasi

Cuttack–753014, Odisha.

WP(C) No.11618 of 2024 Page 2 of 59

3. Commissioner

Central Goods and Services Tax and

Central Excise,

Central Revenue Building, Rajaswa Vihar

Bhubaneswar–751 007

District: Khordha, Odisha. ... Opposite parties

Counsel appeared for the parties:

For the Petitioner : Mr. Jagabandhu Sahoo

Senior Advocate

Assisted by

M/s. Kajal Sahoo,

Ronit Ghosh,

Subhajeet Sahu, Urmila Sahoo

and Romeet Panigrahi,

Advocates

For the Opposite parties : Mr. Sujan Kumar Roy Choudhury ,

Senior Standing Counsel,

Goods and Services Tax,

Central Excise and Customs

P R E S E N T:

HONOURABLE CHIEF JUSTICE

MR. HARISH TANDON

AND

HONOURABLE JUSTICE

MR. MURAHARI SRI RAMAN

Date of Hearing : 07.01.2026 :: Date of Judgment : 22.01.2026

JUDGMENT

MURAHARI SRI RAMAN, J.—

1. Non-consideration of claim for interest on the amount

refunded to the petitioner from the date of deposit till

WP(C) No.11618 of 2024 Page 3 of 59

date of payment is the subject matter in the present writ

petition.

1.1. The petitioner by filing this writ petition craves to invoke

extraordinary jurisdiction under Articles 226 and 227 of

the Constitution of India for grant of following relief(s):

“Under the aforesaid circumstances it is prayed therefore

that this Hon‟ble Court may be graciously pleased to:

(a) Admit the writ application;

(b) Issue rule nisi calling upon the opposite parties as to

why the Order dated 15.01.2024 vide Annexure-10

rejecting the appeal shall not be quashed being

illegal, arbitrary and in violation of principle of

natural justice and contrary to judgment of Hon‟ble

Apex Court as well as various High Courts and

contrary to Order dated 01.12.2022 passed by this

Hon‟ble Court in W.P.(C) No.31896 of 2022;

(c) Issue writ in the nature of mandamus or any other

appropriate writ directing the opposite parties to

make payment of interest @ 6% on the amount

refunded to the petitioner from the date of deposit till

the date of payment of retained amount in the

interest of justice;

(d) If the opposite parties do not show cause or shows

insufficient cause make the rule absolute;

(e) To pass such order/orders, direction/directions,

writ/writs as may be deemed fit and proper in the

circumstances of the case;

(f) To allow the writ petition;

WP(C) No.11618 of 2024 Page 4 of 59

And for this act of kindness, the petitioner shall as in duty

bound and ever pray.”

Case of the petitioner:

2. The petitioner, a company registered under the

Companies Act, 1956, being manufacturer of Fertilizer,

imports raw materials like Anhydrous Ammonia,

Phosphoric Acid, Sulphur, Sulphuric Acid, Rock

Phosphates, Murriate of Potash etc. from the foreign

suppliers. During the period April, 2018 to May, 2018,

the petitioner imported raw materials on Cost, Insurance

Freight (“CIF”, abbreviated) basis and paid the Customs

Duty on the assessable value of such raw materials as

required under the Customs Act, 1962 and the Customs

Tariff Act, 1975. Being a registered taxable person under

the provisions of the Central Goods and Services Tax

Act, 2017/the Odisha Goods and Services Tax Act, 2017

(collectively, “GST Act”) it paid the Integrated Goods and

Services Tax under the Integrated Goods and Services

Tax Act, 2017 (for short, “the IGST Act”) on such value

which included therein the “ocean freight” incurred for

such import on the basis of reverse charge mechanism

at the rate of 5% in terms of Entry 9(ii) under Heading

9965 (Goods Transport Services) of Notification

No.8/2017-Integrated Tax (Rate) dated 28.06.2017

1 and

1

The relevant portion of the Notification No.8/2017-Integrated Tax (Rate), dated

28.06.2017, reads thus:

“In exercise of the powers conferred by sub-section (1) of Section 5, sub-section (1)

of Section 6 and clause (iii) and clause (iv) of Section 20 of the Integrated Goods

WP(C) No.11618 of 2024 Page 5 of 59

Entry 10 of Notification No.10/2017-Integrated Tax

(Rate) dated 28.06.2017

2. The petitioner, being recipient

and Services Tax Act, 2017 (13 of 2017) read with sub-section (5) of Section 15

and sub-section (1) of Section 16 of the Central Goods and Services Tax Act, 2017

(12 of 2017), the Central Government, on the recommendations of the Council,

and on being satisfied that it is necessary in the public interest so to do, hereby

notifies that the integrated tax, on the inter-State supply of servic es of

description as specified in column (3) of the Table below , falling under

Chapter, Section or Heading of scheme of classification of services as specified in

column (2), shall be levied at the rate as specified in the corresponding entry in

column (4), subject to the conditions as specified in the corresponding entry in

column (5) of the said Table:

Table

Sl.

No.

Chapter,

Section

or Heading

Description

of Service

Rate

(per

cent.)

Condition

9 Heading

9965

(Goods

Transport

Services)

(ii) Transport of goods

in a vessel including

services provided or

agreed to be

provided by a

person located in

non-taxable territory

to a person located

in non-taxable

territory by way of

transportation of

goods by a vessel

from a place outside

India up to the

customs station of

clearance in India.

5 Provided that credit of

input tax charged on goods

(other than on ships,

vessels including bulk

carriers and tankers) used

in supplying the service

has not been taken

Explanation:

This condition will not

apply where the supplier of

service is located in

nontaxable territory.

[Please refer to Explanation

No. (iv)]*

*[4. Explanation. —

For the purposes of this notification,

***

(iv) Wherever a rate has been prescribed in this notification subject to the

condition that credit of input tax charged on goods or services used in

supplying the service has not been taken, it shall mean that,—

(a) credit of input tax charged on goods or services used exclusively in

supplying such service has not been taken; and

(b) credit of input tax charged on goods or services used partly for

supplying such service and partly for effecting other supplies

eligible for input tax credits, is reversed as if supply of such service

is an exempt supply and attracts provisions of clause (iv) of Section

20 of the Integrated Goods and Services Tax Act, 2017 read with

sub-section (2) of Section 17 of the Central Goods and Services Tax

Act, 2017 and the rules made thereunder.]”

2

The relevant portion of the Notification No.10/2017-Integrated Tax (Rate), dated

28.06.2017, reads thus:

“In exercise of the powers conferred by sub-section (3) of section 5 of the

Integrated Goods and Services Tax Act, 2017 (13 of 2017), the Central

Government on the recommendations of the Council hereby notifies that on

categories of supply of services mentioned in column (2) of the Table below,

WP(C) No.11618 of 2024 Page 6 of 59

of services, claimed to have discharged its liability in

terms of aforesaid notifications on the amount

representing “ocean freight”.

2.1. Upon deposit of the IGST on the entire assessable value

including “ocean freight” on reverse charge basis, it

reflected the fact and figure in the periodical returns in

Form GSTR-3B and filed the same as obligated under

the statute, nonetheless, vide Letter dated 21.08.2018

and subsequent letters, it intimated the authorities

concerned that the IGST so paid on “ocean freight” on

reverse charge basis was “under protest” and the

petitioner has been objecting to levy of IGST on the

ocean freight.

2.2. The petitioner filed a writ petition, bearing W.P.(C)

No.1684 of 2019, questioning the exigibility of IGST on

such services as received, and thereby challenged the

validity of Notification No.8/2017-Integrated Tax (Rate)

and Notification No.10/2017-(Tax Rate), both dated

28.06.2017, and pleaded to declare these notifications

supplied by a person as specified in column (3) of the said Table, the whole of

integrated tax leviable under Section 5 of the said Integrated Goods and

Services Tax Act, shall be paid on reverse charge basis by the recipient of

the such services as specified in column (4) of the said Table

Table

Sl.

No.

Category of Supply

of Services

Supplier

of Service

Recipient of Service

10 Services supplied by a person

located in non-taxable territory

by way of transportation of

goods by a vessel from a place

outside India up to the customs

station of clearance in India.

A person

located in

nontaxable

territory

Importer, as defined in

clause (26) of section 2

of the Customs Act,

1962 (52 of 1962),

located in the taxable

territory.

”

WP(C) No.11618 of 2024 Page 7 of 59

imposing IGST on “ocean freight” as unconstitutional.

This Court, while entertaining the said writ petition as

well as Interlocutory Application bearing No.1424 of

2019 (arising out of said writ petition), passed the

following Order on 20.02.2019:

“Heard ***.

Admit.

***

As an interim measure, it is directed that any payment

made by the petitioner, pursuant to the impugned

Notification, will be subject to result of the writ

petition.”

2.3. It may be pertinent to discuss that an identical challenge

to aforesaid Notification(s) was made before the Hon‟ble

High Court of Gujarat in the case of Mohit Minerals

Private Limited Vrs. Union of India and others, R/Special

Civil Application No.726 of 2018 and batch, which came

to be disposed of vide Judgment dated 23.01.2020

[reported at (2020) 74 GSTR 134 (Guj) = 2020 SCC OnLine

Guj 49], wherein it has been observed as follows:

“253.In our opinion, such observations, on the contrary,

supports the case of the writ applicants that in a

case of CIF (Cost, Insurance and Freight) contract,

the contract for transportation is entered into by the

seller, i.e., the foreign exporter, and not the buyer,

i.e., the importer, and the importer is not the

recipient of the service of transportation of the goods.

WP(C) No.11618 of 2024 Page 8 of 59

254. In view of the aforesaid discussion, we have

reached to the conclusion that no tax is leviable

under the Integrated Goods and Services Tax Act,

2017 on Ocean Freight for services supplied by a

person located in non-taxable territory by way of

transportation of goods by a vessel from a place

outside India up to the customs station of clearance

in India and levy and collection of tax on such ocean

freight under the impugned notifications is not

permissible under the law.

255. In the result, this writ application along with all

other connected writ applications is allowed. The

impugned Notification No.8/2017-Integrated Tax

(Rate), dated June 28, 2017 and the Entry 10 of the

Notification No.10/2017-Integrated Tax (Rate), dated

June 28, 2017, are declared ultra vires the

Integrated Goods and Services Tax Act, 2017, as

they lack legislative competency. Both the

notifications are hereby declared to be

unconstitutional. Civil Application, if any, stands

disposed of.”

2.4. Said matter was carried to the Hon‟ble Supreme Court of

India, which was disposed of vide Judgment dated 19

th

May, 2022 in Civil Appeal No.1390 of 2022, titled, Union

of India Vrs. Mohit Minerals Pvt. Ltd., (2022) 9 SCR 300

with the following observations:

“145.This Court is bound by the confines of the IGST and

CGST Act to determine if this is a composite supply.

It would not be permissible to ignore the text of

Section 8 of the CGST Act and treat the two

transactions as standalone agreements. In a CIF

contract, the supply of goods is accompanied by the

WP(C) No.11618 of 2024 Page 9 of 59

supply of services of transportation and insurance,

the responsibility for which lies on the seller (the

foreign exporter in this case). The supply of service of

transportation by the foreign shipper forms a part of

the bundle of supplies between the foreign exporter

and the Indian importer, on which the IGST is

payable under Section 5(1) of the IGST Act read with

Section 20 of the IGST Act, Section 8 and Section

2(30) of the CGST Act. To levy the IGST on the

supply of the service component of the transaction

would contradict the principle enshrined in Section 8

and be in violation of the scheme of the GST

legislation. Based on this reason, we are of the

opinion that while the impugned notifications are

validly issued under Sections 5(3) and 5(4) of the

IGST Act, it would be in violation of Section 8 of the

CGST Act and the overall scheme of the GST

legislation. As noted earlier, under Section 7(3) of the

CGST Act, the Central Government has the power to

notify an import of goods as an import of services

and vice versa:

„7. Scope of supply—

[…]

(3) Subject to the provisions of [sub-sections (1),

(1A) and (2)], the Government may, on the

recommendations of the Council, specify, by

notification, the transactions that are to be

treated as—

(a) a supply of goods and not as a supply of

services; or

(b) a supply of services and not as a supply

of goods.‟

WP(C) No.11618 of 2024 Page 10 of 59

No such power can be noticed with respect to

interpreting a composite supply of goods and

services as two segregable supply of goods and

supply of services.

146. The High Court in the impugned judgment has

observed that:

„What has led to the present day problems in the

implementation of the GST:

132. 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 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.

133. It appears that despite having levied and

collected the integrated tax under the IGST Act,

2017, on import of goods on the entire value

WP(C) No.11618 of 2024 Page 11 of 59

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.

134. 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.

[…]

215. 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.‟

147. 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.

148. Based on the above discussion, we have reached

the following conclusion:

WP(C) No.11618 of 2024 Page 12 of 59

(i) The recommendations of the GST Council are not

binding on the Union and States for the following

reasons:

(a) The deletion of Article 279B and the inclusion

of Article 279(1) by the Constitution

Amendment Act 2016 indicates that the

Parliament intended for the recommendations

of the GST Council to only have a persuasive

value, particularly when interpreted along with

the objective of the GST regime to foster

cooperative federalism and harmony between

the constituent units;

(b) Neither does Article 279A begin with a non-

obstante clause nor does Article 246A state

that it is subject to the provisions of Article

279A. The Parliament and the State

legislatures possess simultaneous power to

legislate on GST. Article 246A does not

envisage a repugnancy 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

WP(C) No.11618 of 2024 Page 13 of 59

liberty to use different means of persuasion

ranging from collaboration to contestation; and

(c) 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;

(ii) 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;

(iii) 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;

(iv) 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;

(v) The impugned levy imposed on the „service‟ aspect

of the transaction is in violation of the principle of

WP(C) No.11618 of 2024 Page 14 of 59

„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.”

2.5. When the challenge against the very Notifications

referred to above by the instant petitioner-company was

sub judice before this Court in W.P.(C) No.1684 of 2019,

the decision of the Hon‟ble Supreme Court was passed

affirming the judgment of the Hon‟ble Gujarat High

Court. This Court disposed of said writ petition vide

Order dated 01.08.2022 with the following observations:

“8. In view of authoritative pronouncement of the

Hon‟ble Supreme Court confirming the decision of the

Hon‟ble Gujarat High Court rendered in the case of

Mohit Minerals Pvt. Ltd. Vrs. Union of India, (2020)

74 GSTR 134 (Guj) = (2020) 33 GSTL 321 (Guj) =

2020 SCC OnLine Guj 49 as culled out above, there

remains nothing for adjudication in the instant writ

petition and, therefore, the writ petition is bound to

be allowed in terms of Union of India Vrs. Mohit

Minerals Pvt. Ltd., 2022 SCC OnLine 657.”

2.6. Pursuant to said order, an application for refund of IGST

paid on “ocean freight” in Form GST RFD-01 was made

before the authority concerned on 24.08.2022; in

consideration of which, the Assistant Commissioner,

WP(C) No.11618 of 2024 Page 15 of 59

Central GST and Central Excise, Cuttack-II Division,

Cuttack passed the following Order in GST RFD-06 on

29.09.2022:

“I, hereby, sanction refund of ₹8,37,88,501/- (IGST), filed

vide ARN AA2108220199871 dated 24.08.2022 to M/s.

Paradeep Phosphates Limited, Navaratna Bhawan, PPL

Township, Paradeep, Jagatsinghpur-754145.”

2.7. Since no interest was awarded, the petitioner

approached this Court by way of filing a writ application

bearing W.P.(C) No.31896 of 2022, which came to be

disposed of on 01.12.2022 with the following order:

“In view of the judgment of this Court dated 1

st August,

2022 in W.P.(C) No.1684 of 2019 (M/s. Paradeep

Phosphates Ltd. Vrs. Union of India), liberty is granted to

the Petitioner to make an appropriate application for

statutory interest. The Proper Officer will quantify the

amount in accordance with law taking into account the

judgment of the Supreme Court of India in Union of India

Vrs. Mohit Minerals Pvt. Ltd., 2022 SCC OnLine 657. The

Proper Officer will examine the records of the petitioner

and take appropriate decision within a period of three

months from the date of production of the certified copy of

this order.”

2.8. As a sequel to above, the petitioner filed application for

grant of interest on refund before the authority

concerned. In response to a notice in Form GST RFD-08,

dated 17.01.2023 contemplating rejection of said

application, the petitioner filed a reply in Form GST

RFD-09, dated 31.01.2023. The Assistant

WP(C) No.11618 of 2024 Page 16 of 59

Commissioner, Central GST and Central Excise,

Cuttack-II Division, Cuttack refused to grant interest

vide Order in RFD-06 dated 06.02.2023 with the

following observation(s):

“3.0. Discuss and Findings:

3.1. I have carefully gone through the refund application

of the claimant in light of the provisions of Section 54

of the CGST Act, 2017, read with Section 56 of the

CGST Act, 2017 and Hon‟ble High Court of Orissa

order dated 01.12.2022 against the Writ Petition

No.W.P.(C) No.31896 of 2022 along with the

supporting documents submitted by the claimant in

this context.

3.2. I find that the refund has been claimed for an

amount of Rs.19,04,84,217/- on ground of

Assessment/Provisional Assessment/Appeal/Any

other Order.

3.3. Ongoing through the relevant portion of Rule 89(1) of

the CGST Rules, 2017 and sub-clause 49(c) of

Circular 125/44/2019-GST dated 18

th November,

2019 in light of sub-rule (2) of Rule 90 of the CGST

Rules, which are discussed above in para 2.3 and

2.4 above, I find that the refund application is held

to be filed from the date of electronically filing of

Refund application and generation of the ARN, as

per the Rule and Circular mentioned above.

3.4. Further, the term “statutory interest” contained in

the Order 01.12.2022 of the Hon‟ble High Court of

Orissa in W.P.(C) No.31896 of 2022 is referred to

interest on delayed payment of refund to a refund

claimant as provided in Section 56 of the CGST Act,

WP(C) No.11618 of 2024 Page 17 of 59

2017. I also find that, consequent to judgment and

order dated 01.02.2022 of the Hon‟ble High Court of

Orissa against the writ petition No.1684 of 2019, in

all the cases pertaining to Ocean freight, the refunds

were sanctioned within the stipulated time of 60

(Sixty) days from the date of refund applications as

per statutory provision of Section 54 read with

Section 56 of CGST Act, 2017. Therefore, no interest

is payable on the refunded amounts which have

been credited to the applicant‟s account within the

stipulated period from the dates of refund

applications.

3.5. On going through the SCN reply submitted by the

claimant, I find that different periods for calculation

of interest have been mentioned in „Para A‟, „Para

B2‟ and „Para C4‟ of the claimant‟s reply and actual

calculation has been made from another date i.e.

from the date of filing of GSTR-3B return. As found

from the above mentioned paras of their reply, the

relevant dates have been quoted differently viz.,

(i) date on which “letters filed by the notices

stating that they are challenging the taxability

of ocean freight under reverse charge before

the Hon‟ble Odisha High Court and paying

IGST under protest”,

(ii) “Hence, the date of refund claim should be the

date of filing the petition before the High

Court.” and

(iii) “*** Refund becomes due from the date when

the amount was paid under protest”.

The abovementioned different dates/calculations

have been done by the refund claimant since there is

WP(C) No.11618 of 2024 Page 18 of 59

no such rules/authority available to corroborate their

claim. Thus, the refund application and the interest

calculation done therein is found to be ambiguous

and lacks any statutory support.

3.6. I find that the RFD-01 does not merit sanction of the

refund claim amount and I pass the following order,

accordingly.”

2.9. The petitioner preferred an appeal against the Order of

rejection of said application for grant of interest under

Section 107 before the Assistant Commissioner

(Appeals). Said appeal came to be dismissed vide Order

dated 15.01.2024 by the Additional Commissioner, GST

(Appeals) referring to provisions of Section 54 and

Section 56 of the CGST Act

3. Assailing legality of said

3

The provisions of Section 54 and Section 56 of the CGST Act as relied on by the

Appellate Authority at paragraph 10 of his order are extracted hereunder:

“10.1 The relevant portion of Section 54 of the CGST Act, 2017 is reproduced as

under:

Section 54.

Refund of tax. —

(1) Any person claiming refund of any tax and interest, if any, paid on

such tax or any other amount paid by him, may make an

application before the expiry of two years from the relevant date in

such form and manner as may be prescribed:

***

(4) The application shall be accompanied by:

(a) such documentary evidence as may be prescribed to

establish that a refund is due to the applicant; and

(b) such documentary or other evidence (including the

documents referred to in Section 33) as the applicant may

furnish to establish that the amount of tax and interest, if

any, paid on such tax or any other amount paid in relation

to which such refund is claimed was collected from, or paid

by, him and the incidence of such tax and interest had not

been passed on to any other person:

Provided that where the amount claimed as refund is less

than two lakh rupees, it shall not be necessary for the

applicant to furnish any documentary and other evidences

but he may file a declaration, based on the documentary or

other evidences available with him, certifying that the

WP(C) No.11618 of 2024 Page 19 of 59

incidence of such tax and interest had not been passed on

to any other person.

(5) If, on receipt of any such application, the proper officer is satisfied

that the whole or part of the amount claimed as refund is

refundable, he may make an order accordingly and the amount so

determined shall be credited to the Fund referred to in Section 57.

10.2 As per Section 54(1) of the CGST Act, 2017, the refund claim is to be filed

within two years from the relevant date. The relevant date is defined

under Explanation (2) to Section 54 of the CGST Act. The relevant portion

of the said is provided as under.

„(2) „relevant date‟ means—

(a) in the case of goods exported out of India where a refund of tax

paid is available in respect of goods themselves or, as the case

may be, the inputs or input services used in such goods,

(i) if the goods are exported by sea or air, the date on which

the ship or the aircraft in which such goods are loaded,

leaves India; or

(ii) if the goods are exported by land, the date on which such

goods pass the frontier; or

(iii) if the goods are exported by post, the date of despatch of

goods by the Post Office concerned to a place outside India;

***

(d) in case where the tax becomes refundable as a consequence of

judgment, decree, order or direction of the Appellate Authority,

Appellate Tribunal or any court, the date of communication of such

judgment, decree, order or direction;‟

10.3 Section 56 of the CGST Act is reproduced as under:

Section 56.

Interest on delayed refunds. —

If any tax ordered to be refunded under sub-section (5) of section 54 to

any applicant is not refunded within sixty days from the date of receipt of

application under sub-section (1) of that section, interest at such rate not

exceeding six per cent. as may be specified in the notification issued by

the Government on the recommendations of the Council shall be payable

in respect of such refund from the date immediately after the expiry of

sixty days from the date of receipt of application under the said sub-

section till the date of refund of such tax:

Provided that where any claim of refund arises from an order passed by

an adjudicating authority or Appellate Authority or Appellate Tribunal or

court which has attained finality and the same is not refunded within

sixty days from the date of receipt of application filed consequent to such

order, interest at such rate not exceeding nine per cent. as may be notified

by the Government on the recommendations of the Council shall be

payable in respect of such refund from the date immediately after the

expiry of sixty days from the date of receipt of application till the date of

refund.

Explanation. —

For the purposes of this section, where any order of refund is made by an

Appellate Authority, Appellate Tribunal or any Court against an order of

the Proper Officer under sub-section section (5) of Section 54, the order

passed by the Appellate Authority, Appellate Tribunal or by the Court

shall be deemed to be an order passed under the said sub-section (5).”

WP(C) No.11618 of 2024 Page 20 of 59

Order-in-Appeal confirming the decision of the Assistant

Commissioner refusing grant of interest on refund, the

petitioner has preferred the instant writ petition.

Hearing:

3. Since a short point is involved in this matter whether

Appellate Authority is justified in confirming the order of

Assistant Commissioner, Central Goods and Services

Tax and Central Excise, Cuttack-II Division, Cuttack in

refusing to grant of interest on the refunded amount of

IGST, which was paid “under protest”, on “ocean freight”

in terms of Notification No.8/2017-Integrated Tax (Rate),

dated 28.06.2017 and Notification No.10/2017-

Integrated Tax (Rate), dated 28.06.2017, being declared

unconstitutional hit by Article 265 of the Constitution of

India

4, from the date of deposit till date of actual refund,

on the consent of the learned counsel for the parties,

this matter is taken up for final hearing.

3.1. Heard Sri Jagabandhu Sahoo, learned Senior Advocate

assisted by Smt. Kajal Sahoo, learned Advocate for the

petitioner and Sri Sujan Kumar Roy Choudhury, learned

Senior Standing Counsel for the opposite parties.

3.2. Hearing being concluded, the matter stood reserved for

preparation and pronouncement of Judgment.

4

Article 265 of the Constitution of India lays down that “Taxes not to be imposed

save by authority of law.— No tax shall be levied or collected except by authority

of law.”

WP(C) No.11618 of 2024 Page 21 of 59

Arguments:

4. Sri Jagabandhu Sahoo, learned Senior Advocate

appearing for the petitioner submitted that the Appellate

Authority in confirming the Order rejecting the

application for grant of interest on the amount refunded

with respect to the unauthorized levy of IGST on “ocean

freight” is outcome of non -application of mind,

injudicious and bereft of application of law. The case law

referred to by the Appellate Authority is misplaced

inasmuch as the refund in the instant case does not

emanate from any statutory proceedings or decision

rendered by the statutory authority in connection with

statutory remedy provided for in the GST Act and the

Rules framed thereunder. Nevertheless, the refund flows

in the present case is on account of levy of IGST on

“ocean freight” being declared unconstitutional, illegal

and without authority of law. Since the levy of tax is

without authority of law, in view of provision enshrined

under Article 265 of the Constitution of India, there is no

scope to deny interest on refund of IGST from the date of

its collection till the date of actual refund.

4.1. The case law relied on by the statutory authority is in

the context of interest on refund of tax paid whenever an

amount, which is returned by the tax authorities in

exercise of statutory power becomes refundable as a

result of any subsequent proceedings. He, thus, urged

WP(C) No.11618 of 2024 Page 22 of 59

that while discharging its obligation under the statute,

the returns were filed disclosing the fact and figures and

the deposit of the IGST on account of “ocean freight” was

made “under protest”. The very exigibility of IGST on

“ocean freight” was under challenge. Ultimately the

objection of the petitioner found favour with and the

Hon‟ble Supreme Court of India affirmed the view of the

Hon‟ble High Court of Gujarat expressed in Mohit

Minerals Pvt. Ltd. (supra). Thus being the position, the

levy of IGST on “ocean freight” becomes unauthorized in

view of Article 265 of the Constitution of India.

4.2. In the instant case, the authorities concerned committed

error of law in refusing to grant interest on the quantum

of refund from the date of deposit bearing in mind as if

such refund had flown from exhaustion of statutory

remedy. Unauthorised collection of tax, as is submitted

by the learned Senior Counsel, on the declaration by the

Court becomes vulnerable and the amount is due to be

returned to the depositor/taxpayer with interest.

5. Sri Sujan Kumar Roy Choudhury, learned Senior

Standing Counsel appearing for the opposite parties did

not dispute that there is distinction between interest on

withholding of refund and unauthorised collection of tax

on its being declared ultra vires, even though he was

given opportunity to address argument in this regard

vide Order dated 05.08.2024 passed in the present

WP(C) No.11618 of 2024 Page 23 of 59

matter. Merely supporting the reasons assigned by the

authorities concerned, he would argue that since the

refund was granted to the petitioner within the statutory

period specified from the date of making application,

there is no justification to claim for interest on the

amount of refund. He sought to countenance the

contents and stand taken by the opposite parties in the

counter affidavit.

Analysis and discussions:

6. Having diligently considered the arguments of the Senior

Counsel for the petitioner and learned Senior Standing

Counsel appearing for opposite parties and perused the

record, it remains undisputed that the petitioner has

been paying IGST on the entire value including therein

the amount of “ocean freight” incurred with respect to

CIF contract. Such payment was made “under protest”.

The levy of IGST on “ocean freight” in terms of

Notifications dated 28.06.2017 is held to be without

authority of law as “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” and “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

WP(C) No.11618 of 2024 Page 24 of 59

the „supply of services‟ by the shipping line would be in

violation of Section 8 of the CGST Act”.

6.1. This Court while entertaining the instant writ petition

passed the following Order on 05.08.2024:

“4. We find two reasons that straightway appear from

paragraph-3 in the adjudication order. First is, as

submitted by Mr. Satapathy, the refund was made

within time provided by the provision. Second

reason is no rule or authority is available to

corroborate claim of petitioner. Section 54

provides contingency of withholding refund for

purpose of revenue. However, ultimately if the

refund is to be made then the payment of

statutory interest at 6% is also provided. This

case is not a case of withholding refund. The

tax was duly collected on strength of

notifications, ultimately set aside by the

Supreme Court. Therefore, there was no

authority to collect the tax. Hence, the claim

for interest. Rate of interest may be inspired by

the provision in providing 6%. Revenue will be

heard.”

6.2. A counter affidavit has come to be filed by the opposite

parties on 24.12.2024 sworn to by the Chief

Commissioner (in-situ), GST and Central Excise,

Bhubaneswar Commissionerate, Bhubaneswar. It is

manifest from the counter affidavit that since the refund

has been sanctioned within sixty days of receipt of

application in terms of Section 54 read with Section 56

of the GST Act, no interest is payable to the petitioner. It

WP(C) No.11618 of 2024 Page 25 of 59

is not denied or disputed that the petitioners deposited

IGST on the component of “ocean freight” as per the

notifications in question. Said collection was made upon

levy of IGST by virtue of notifications. The levy under the

Notifications has been declared not competent in Mohit

Minerals Pvt. Ltd. (supra). However, the opposite parties

have not addressed the query posed as reflected under

paragraph-4 of Order dated 05.08.2024 passed in the

present case.

6.3. Therefore, it is construed that the opposite parties have

no answer to such query. It is not argued by the learned

Senior Standing Counsel with respect to distinction on

withholding the refund by the statutory authority during

the pendency of statutory remedies vis-a-vis the refund

of tax levied and collected held to be unauthorised in

view of the notifications being declared infirm in law.

6.4. Culling out distinction and arguing inapplicability of

Section 56 to the fact-situation of the present case, Sri

Jagabandhu Sahoo, learned Senior Advocate for the

petitioner referring to paragraph-12 of the rejoinder

affidavit, submitted that sanction of refund within sixty

days from the date of filing of application in Form GST

RFD-01 in terms of Section 56 of the GST Act read with

Rule 89 of the GST Rules, 2017, would not clothe the

Authority to discharge his obligation to pay interest by

way of restitution on the quantum of IGST levied on

WP(C) No.11618 of 2024 Page 26 of 59

“ocean freight” in terms of Notification No.8/2017-

Integrated Tax (Rate) and Notification No.10/2017 -

Integrated Tax (Rate), both dated 28.06.2017.

6.5. In South Eastern Coalfields Ltd. Vrs. State of M.P., (2003)

8 SCC 648 it is observed thus:

“26. In our opinion, the principle of restitution takes care

of this submission. The word “restitution” in its

etymological sense means restoring to a party on the

modification, variation or reversal of a decree or

order, what has been lost to him in execution of

decree or order of the court or in direct consequence

of a decree or order (see Zafar Khan Vrs. Board of

Revenue, U.P., 1984 Supp SCC 505). In law, the

term “restitution” is used in three senses:

(i) return or restoration of some specific thing to its

rightful owner or status;

(ii) compensation for benefits derived from a

wrong done to another; and

(iii) compensation or reparation for the loss caused

to another. (See Black‟s Law Dictionary, 7th

Edn., p. 1315).

The Law of Contracts by John D. Calamari & Joseph

M. Perillo has been quoted by Black to say that

“restitution” is an ambiguous term, sometimes

referring to the disgorging of something which has

been taken and at times referring to compensation

for the injury done:

„Often, the result under either meaning of the term

would be the same. … Unjust impoverishment, as

WP(C) No.11618 of 2024 Page 27 of 59

well as unjust enrichment, is a ground for

restitution. If the defendant is guilty of a non-tortious

misrepresentation, the measure of recovery is not

rigid but, as in other cases of restitution, such

factors as relative fault, the agreed-upon risks, and

the fairness of alternative risk allocations not agreed

upon and not attributable to the fault of either party

need to be weighed.‟

The principle of restitution has been statutorily

recognised in Section 144 of the Code of Civil

Procedure, 1908. Section 144 CPC speaks not only

of a decree being varied, reversed, set aside or

modified but also includes an order on a par with a

decree. The scope of the provision is wide enough so

as to include therein almost all the kinds of

variation, reversal, setting aside or modification of a

decree or order.”

6.6. Pleading in the counter affidavit is silent as to the case

of present nature could be comprehended within any of

the contingencies specified under Section 56 read with

Rule 89. Nothing is argued by the learned Senior

Standing Counsel to assert that the refund granted to

the petitioner fell within the scope of provisions for

interest on refund that flows from exhaustion of the

statutory remedy. Rather this Court finds force in the

argument advanced by the learned Senior Advocate for

the petitioner that the deposits made towards IGST on

the component of “ocean freight” turned out to be on

WP(C) No.11618 of 2024 Page 28 of 59

account of illegal “levy”

5. When it is found that the

compulsory exaction of IGST in pursuance of

Notifications dated 28.06.2017 and said notifications are

held to be invalid, the State cannot retain such amount.

There is no option left open but to refund the retained

amount of IGST to the depositor.

6.7. It may be apposite to have regard to the following

observation of the Hon‟ble Punjab and Haryana H igh

Court in the case of Sandhu Overseas Vrs. State of

Haryana, (2011) 45 VST 244 (P&H) rendered in the

context of exercise of power to withhold the refund

during the pendency of appeal or further proceedings

within the purview of the statutory provisions:

“7. It is clear from bare perusal of the above provision

that Section 44(2) providing for exclusion of period

during which refund was withheld for calculation of

interest applies only if withholding of refund

5

In Union of India Vrs. Rajeev Bansal, (2024) 10 SCR 1633 referring to many

earlier judgments with respect to distinction between “levy” and “collection” vis-

à-vis Article 265 of the Constitution of India, it has been observed as follows:

“21. The power to levy tax is an essential and inherent attribute of sovereignty.

It is an inherent attribute because the government requires funds to

discharge its governmental functions. Taxation is also a recognised fiscal

tool to achieve fiscal and social objectives. Although the power to levy

taxes is plenary, it is subject to certain well-defined limitations. Article 265

of the Constitution provides that no tax shall be levied or collected except

by authority of law. A taxing statute must be valid and conform to other

provisions of the Constitution.

22. Article 265 makes a distinction between “levy” and “collection.” The

expression “levy” has a wider connotation. It includes both the imposition

of a tax as well as assessment. The quantum of tax levied by a taxing

statute, the conditions subject to which it is levied, and how it is sought to

be recovered are all matters within the competence of the legislature. In a

taxing statute, the charging provisions are generally accompanied by a set

of provisions for computing or assessing the levy. The character of

assessment provisions bears a relationship to the nature of the charge.”

WP(C) No.11618 of 2024 Page 29 of 59

was valid. Once withholding of refund is held to be

illegal, Section 44(2) of the Act cannot be held to be

applicable. In the present case, withholding of

refund is not shown to be for a valid reason. Once it

is so, Section 44(2) of the Act

6 had no application.”

6.8. Glance at provisions of Section 56 of the GST Act dealing

with “Interest on delayed refunds” is silent about grant

of interest on refund when it emanates from declaration

of the statutory notifications as illegal or ultra vires or

the levy and collection of tax being rendered

constitutionally invalid. In this connection, this Court

seeks to take note of the following discussion rendered

by the Hon‟ble Supreme Court of India in the case of Dr.

Poornima Advani Vrs. Government of NCT, (2025) 2 SCR

1178:

“8. Thus, in paragraph 19, the learned Single Judge

posed a question for his consideration whether the

circumstances in which the refund was prayed for

by the appellants herein, would be a relevant

consideration for ordering refund of the said amount.

In other words, the learned Single Judge asked a

question to himself whether the court, in such

circumstances, should fold its hands and deny relief

6

Section 44 of the Haryana General Sales Tax Act, 1973 stood thus:

“44.Power to withhold refund.—

(1) Where an order giving rise to a refund is the subject-matter of an appeal or

further proceedings or where any other proceedings under this Act are

pending, and the assessing authority or a person appointed to assist the

Commissioner under sub-section (1) of Section 3, as the case may be, is of

the opinion that the grant of the refund is likely to be adversely affect the

recovery, he may withhold the refund and refer the case to the Commissioner

for order. The orders passed by the Commissioner shall be final.

(2) The period during which the refund remains so withheld shall be excluded

for the purpose of calculation of interest under Section 43.”

WP(C) No.11618 of 2024 Page 30 of 59

to a person, who has lost the e-stamp paper, only

because the draftsman has omitted the use of such

expression explicitly in the Statute.

9. After an exhaustive discussion on various aspects of

the matter, the learned Single Judge thereafter

proceeded to draw a fine distinction between the

„doctrine of unjust enrichment‟ as opposed to

„doctrine of retention‟. Ultimately, the learned Single

Judge allowed the writ petition in part.

***

14. The short point that falls for our consideration is

whether in the facts and circumstances of the case,

the appellants herein are entitled to claim interest on

the refunded amount of Rs.28,10,000/- referred to

above.

***

16. The concept of awarding interest on delayed

payment has been explained by this Court in the

case of Authorised Officer, Karnataka Bank Vrs.

M/s. R.M.S. Granites Pvt. Ltd. & Ors. in Civil Appeal

No.12294 of 2024, we quote the following

observations:

„It may be mentioned that there is misconception

about interest. Interest is not a penalty or

punishment at all, but it is the normal accretion on

capital. For example if A had to pay B a certain

amount, say ten years ago, but he offers that

amount to him today, then he has pocketed the

interest on the principal amount. Had A paid that

amount to B ten years ago, B would have invested

that amount somewhere and earned interest

WP(C) No.11618 of 2024 Page 31 of 59

thereon, but instead of that A has kept that amount

with himself and earned interest on it for this period.

Hence equity demands that A should not only pay

back the principal amount but also the interest

thereon to B. [See: Alok Shanker Pandey Vrs. Union

of India, AIR 2007 SC 1198.]‟

17. Thus, when a person is deprived of the use of

his money to which he is legitimately entitled,

he has a right to be compensated for the

deprivation which may be called interest or

compensation. Interest is paid for the deprivation

of the use of money in general terms which has

returned or compensation for the use or retention by

a person of a sum of money belonging to other.

18. As per Black‟s Law Dictionary (7th Edn.): “interest”

is the compensation fixed by agreement or allowed

by law for use or detention of money or for the loss

of money of one who is entitled to its use, especially,

the amount owned to a lender in return for the use of

the borrowed money.

19. As per Stroud‟s Judicial Dictionary of Words and

Phrases (5th edn.): interest means, inter alia,

compensation paid by the borrower to the lender for

deprivation of the use of his money.

20. In the case of Secretary, Irrigation Department,

Government of Orissa Vrs. G.C. Roy, (1992) 1 SCC

508, a Constitution Bench of this Court opined that a

person deprived of use of money to which he is

legitimately entitled has a right to be compensated

for the deprivation, call it by any name. It may be

called interest, compensation or damages. This is

WP(C) No.11618 of 2024 Page 32 of 59

also the principle of Section 34 of the Civil Procedure

Code.

21. The essence of interest as held in the case of Lord

Wright in Riches Vrs. Westminister Bank Ltd., 1947

(1) ALL ER 469, at page 472, is that it is a payment,

which becomes due because the creditor has not

had his money at the due date. It may be recorded

either as representing the profit he might have made

if he had had the use of the money, or, conversely,

the loss he suffered because he had not that use.

22. In the case of Commissioner of Income Tax Vrs. Dr.

Sham Lal Narula, AIR 1963 Punjab 411, a Division

Bench of the High Court of Punjab articulated the

concept of interest as under:

„The words „interest‟ and „compensation‟ are

sometimes used interchangeably and on other

occasions they have distinct connotation. “Interest”

in general terms is the return or compensation for

the use or retention by one person of a sum of money

belonging to or owed to another. In its narrow sense,

„interest‟ is understood to mean the amount which

one has contracted to pay for use of borrowed

money. *** In whatever category “interest” in a

particular case may be put, it is a consideration paid

either for the use of money or for forbearance in

demanding it, after it has fallen due, and thus, it is a

charge for the use or forbearance of money. In this

sense, it is a compensation allowed by law or fixed

by parties, or permitted by custom or usage, for use

of money belonging to another, or for the delay in

paying money after it has become payable.‟

WP(C) No.11618 of 2024 Page 33 of 59

23. The appeal filed against aforesaid decision was

dismissed by this Court in Sham Lal Narula Dr. Vrs.

CIT, AIR 1964 SC 1878.

24. In the case of Hello Minerals Water (P) Ltd. Vrs.

Union of India, (2004) 174 ELT 422, (paras 15 and

16), a Division Bench of the Allahabad High Court

explained the concept of interest as under:

„15. We may mention that we are passing the

direction for interest since interest is the normal

accretion on capital. Often there is

misconception about interest. Interest is not a

penalty or punishment at all.

16. For instance, if A had to pay a certain sum of

money to B at a particular time, but he pays it

after a delay of several years, the result will be

that the money remained with A and he would

have earned interest thereon by investing it

somewhere. Had he paid that amount at the

time when it was payable then B would have

invested it somewhere, and earned interest

thereon. Hence, if a person has illegally

retained some amount of money then he

should ordinarily be directed to pay not

only the principal amount but also the

interest earned thereon . Money doubles

every six years (because of compound interest).

Rs. hundred in the year 1990 would become

Rs. two hundred in the year 1996 and it will

become Rs.400 in the year 2002. Hence, if A

had to pay B a sum of rupees 100 in the year

1990 and he pays that amount only in the year

2002, the result will be that A has pocketed

Rs.300 with himself. This clearly cannot be

WP(C) No.11618 of 2024 Page 34 of 59

justified because had he paid that amount to B

in the year 1990, B would be having Rs.400 in

the year 2002 instead of having only Rs.100/-.

Hence, ordinarily interest should always be

awarded whenever any amount is detained or

realized by someone, otherwise the person

receiving the amount after considerable delay

would be losing the entire interest thereon

which will be pocketed by the person who

managed the delay, it is for this reason that we

have ordered for payment of interest alongwith

the amount realized as export pass fee.‟

25. If on facts of a case, the doctrine of restitution is

attracted, interest should follow. Restitution in its

etymological sense means restoring to a party on the

modification, variation or reversal of a decree or

order what has been lost to him in execution of

decree or order of the Court or in direct consequence

of a decree or order. The term “restitution” is used in

three senses, firstly, return or restoration of some

specific thing to its rightful owner or status,

secondly, the compensation for benefits derived from

wrong done to another and, thirdly, compensation or

reparation for the loss caused to another.

26. In Hari Chand Vrs. State of U.P., 2012 (1) AWC 316,

the Allahabad High Court dealing with similar

controversy in a stamp matter held that the payment

of interest is a necessary corollary to the retention of

the money to be returned under order of the

appellate or revisional authority. The High Court

directed the State to pay interest @ 8% for the

period, the money was so retained i.e. from the date

of deposit till the date of actual repayment/refund.

WP(C) No.11618 of 2024 Page 35 of 59

27. In the case of O.N.G.C. Ltd. Vrs. Commissioner of

Customs Mumbai, JT 2007 (10) SC 76, (para 6), the

facts were that the assessment orders passed in the

Customs Act creating huge demands were ultimately

set aside by this Court. However, during pendency

of appeals, a sum of Rs.54,72,87,536/- was

realized by way of custom duties and interest

thereon. In such circumstances, an application was

filed before this Court to direct the respondent to pay

interest on the aforesaid amount w.e.f. the date of

recovery till the date of payment. The appellants

relied upon the judgment in the case of South

Eastern Coal Field Ltd. Vrs. State of M.P., (2003) 8

SCC 648. This Court explained the principles of

restitution in the case of O.N.G.C. Ltd. (supra) as

under:

„Appellant is a public sector undertaking.

Respondent is the Central Government. We agree

that in principle as also in equity the appellant

is entitled to interest on the amount deposited

on application of principle of restitution. In the

facts and circumstances of this case and particularly

having regard to the fact that the amount paid by

the appellant has already been refunded, we direct

that the amount deposited by the appellant shall

carry interest at the rate of 6% per annum. Reference

in this connection may be made to Pure Helium

Indian (P) Ltd. Vrs. Oil & Natural Gas Commission,

JT 2003 (Suppl. 2) SC 596 and Mcdermott

International Inc. Vrs. Burn Standard Co. Ltd. JT

2006 (11) SC 376.‟

Compensation:

WP(C) No.11618 of 2024 Page 36 of 59

28. The word „Compensation‟ has been defined in P.

Ramanatha Aiyar‟s Advanced Law Lexicon, 3rd

Edition 2005, page 918 as follows:

„An act which a Court orders to be done, or money

which a Court orders to be paid, by a person whose

acts or omissions have caused loss or injury to

another in order that thereby the person damnified

may receive equal value for his loss, or be made

whole in respect of his injury; the consideration or

price of a privilege purchased something given or

obtained as an equivalent the rendering of an

equivalent in value or amount; an equivalent given

for property taken or for an injury done to another;

the giving back an equivalent in either money which

is but the measure of value, or in actual value

otherwise conferred; a recompense in value a

recompense given for a thing received recompense

for the whole injury suffered remuneration or

satisfaction for injury or damage of every description

remuneration for loss of time, necessary

expenditures, and for permanent disability if such be

the result; remuneration for the injury directly, and

proximately caused by at breach of contract or duty;

remuneration or wages given to an employee or

officer.‟

29. In the case of Union of India through Director of

Income Tax Vrs. Tata Chemicals Ltd., (2014) 6 SCC

335, this Court held that when the collection is

illegal, the Revenue is obliged to refund such

amount with interest as money so deposited

was retained and enjoyed by it. No discrimination

can be shown between the assessee and Revenue in

paying interest on the refund of tax. Money received

and retained without right, carries with it the right to

WP(C) No.11618 of 2024 Page 37 of 59

interest. There being no express statutory provision

for payment of interest on the refund of excess

amount/tax collected by the Revenue, the

Government cannot shrug off its apparent obligation

to reimburse the deductors lawful monies with

accrued interest for the period of undue retention of

such monies. Obligation to refund money received

and retained without right implies and carries with

in the right to interest. The relevant observations are

as under:

„Providing for payment of interest in case of refund of

amounts paid as tax or deemed tax or advance tax

is a method now statutorily adopted by fiscal

legislation to ensure that the aforesaid amount of tax

which has been duly paid in prescribed time and

provisions in that behalf form part of the recovery

machinery provided in a taxing statute. Refund due

and payable to the assessee is debt owed and

payable by the Revenue. The Government, there

being no express statutory provision for payment of

interest on the refund of excess amount/tax

collected by the Revenue, cannot shrug off its

apparent obligation to reimburse the deductors

lawful monies with the accrued interest for the

period of undue retention of such monies. The State

having received the money without right and having

retained and used it, is bound to make the party

good, just as an individual would be under like

circumstances. The obligation to refund money

received and retained without right implies and

carries with it the right to interest. Whenever money

has been received by a party which ex ae quo et

bono ought to be refunded, the right to interest

follows, as a matter of course.‟ ***”

WP(C) No.11618 of 2024 Page 38 of 59

6.9. On the conspectus of above legal position, examining the

present matter, it is evident from interim Order dated

20.02.2019 passed in I.A. No.1424 of 2019 arising out of

W.P.(C) No.1684 of 2019 passed by this Court in exercise

of writ jurisdiction in the case of instant petitioner in the

present context on the earlier round of litigation, that

“any payment made by the petitioner, pursuant to

impugned Notifications will be subject to result of the writ

petition”. Since the Notifications have been declared

illegal and levy has been stated to be unauthorized in

Mohit Minerals Pvt. Ltd. (supra), said case [W.P.(C)

No.1684 of 2019] finally came to be disposed of vide

Order dated 01.08.2022 with the following observations:

“8. In view of authoritative pronouncement of the

Hon‟ble Supreme Court confirming the decision of the

Hon‟ble Gujarat High Court rendered in the case of

Mohit Minerals Pvt. Ltd. Vrs. Union of India, (2020)

74 GSTR 134 (Guj) = (2020) 33 GSTL 321 (Guj) =

2020 SCC OnLine Guj 49 as culled out above, there

remains nothing for adjudication in the instant writ

petition and, therefore, the writ petition is bound to

be allowed in terms of Union of India Vrs. Mohit

Minerals Pvt. Ltd., 2022 SCC OnLine 657.

9. In consequence, the petitioner is at liberty to make

appropriate application before the competent Proper

Officer in order to raise claim for refund in terms of

Order dated 20.02.2019 to the effect that “any

payment made by the petitioner, pursuant to the

impugned notification, will be subject to result of the

writ petition” as directed by this Court in the instant

WP(C) No.11618 of 2024 Page 39 of 59

writ petition. The Proper Officer shall quantify the

amount in accordance with law particularly taking

into account the legal proposition as propounded in

Union of India Vrs. Mohit Minerals Pvt. Ltd., 2022

SCC OnLine 657. The Proper Officer may examine

the records of the petitioner and take appropriate

decision within a period of three months from the

date of production of the certified copy of this order.”

6.10. It may be relevant to have reference to Commissioner,

Commercial and Sales Taxes Vrs. Orient Paper Mills Ltd.,

(2004) 2 SCR 451, wherein it has been held as follows:

“It is a well-known maxim in law that no person should

be affected or allowed to suffer by an order passed by a

Court of law. Even if it is accepted that the direction of the

Court of law appears to be at variance with the statutory

provision while exercising writ jurisdiction, as an

equitable measure the Court can pass such order as it

may deem proper, but in no way going beyond the

permissible extent of exercising the jurisdiction. As was

observed by this Court in Tata Refractories Ltd and Anr.

Vrs. Sales Tax Officer and Ors., (2003) 1 SCC 65 while

dealing with an identical dispute it was held as follows:

„It is to be noted that the order of the High Court in the

earlier writ petition namely, OJC No. 1200 of 1995 was

made by the High Court in the exercise of its power under

Articles 226 and 227 of the Constitution of India wherein

while directing the appellants to deposit the amount

quantified therein, the High Court also issued a direction

to the respondent State that it should refund the amount

with interest at the rate of 18% per annum in the event of

the appellants succeeding in the second appeal. This

order is definitely not one made under the provisions of

WP(C) No.11618 of 2024 Page 40 of 59

the Act. The respondent State which took benefit of the

said order and retained the amount deposited by the

appellant, cannot now be permitted to say when it comes

to refund the direction issued by the High Court in its

order dated 15.03.1995 will not be binding on it and it is

only the provisions of the statute that will bind. As noted

above, it is not by invoking the provisions of the Act,

the deposit was directed to be made by the High

Court, hence, any direction made while making an

order under Articles 226 and 227, to deposit any

sum of money will be governed by the conditions

imposed in the order directing such deposit. On the

contrary, if any such condition as to the interest had not

been made by the High court while directing the deposit of

the amount then it could be said that the refund which

may become payable will be governed by the provisions of

the State Act. In the instant case, since the very order

which directed the deposit itself has directed the refund

with 18% interest, we have not doubt in holding the said

order as to mean that the refund should be made with

interest at the rate of 18% from the date on which the

amount was deposited pursuant to the order of the High

Court dated 15.03.1995.‟

The High Court erroneously applied the import of Section

14-C to the facts of the present case.”

6.11. In the present case this Court at the time of

consideration of prima facie merit of the matter vide

Order dated 05.08.2024 made a clear observation that

the tax was duly c ollected on the strength of

notifications, ultimately set aside by the Supreme Court

of India; as such there was no authority to collect the

tax. Therefore, it directed for hearing from the side of the

WP(C) No.11618 of 2024 Page 41 of 59

Revenue on the question of scope to allow interest on the

amount refunded. Neither any specific averment is made

in the counter affidavit nor was it argued by the learned

Senior Standing Counsel with respect to levy of interest

on refund where the IGST levied and collected by the

Department with respect to “ocean freight” was held to

be illegal and invalid in the eye of law; thereby retaining

the amount representing IGST on ocean freight would be

contrary to what is envisioned in Article 265 of the

Constitution of India. Rather entire pleading by the

Revenue rested on the application made under Section

54 read with Section 56 of the GST Act, which in the

opinion of this Court is incorrect approach.

6.12. Be it stated with reference to Ujjam Bai Vrs. State of

Uttar Pradesh, (1963) 1 SCR 778 that a tax cannot be

levied by the State, unless a law to that effect exists, and

that law must follow and obey all the directions in the

Constitution about the making of laws. In other words,

the law must be one validly made. But where a tax is

levied by a competent legislature, after due compliance

with all the requirements relating to the making of laws

and when it is subordinate legislation, the requirements

of other relevant laws, and is also not in violation of any

provision of the Constitution it will operate as a

reasonable restriction upon the right of a person to carry

on his trade, business etc. Though a person‟s right to

WP(C) No.11618 of 2024 Page 42 of 59

carry on a trade or business is a fundamental right it is

thus subject to the aforesaid limitations. With benefit of

understanding the nuance of Article 265, the following

observation of the Hon‟ble Court in Ujjam Bai (supra)

may be quoted:

“A similar but not exactly the same position arose in the

Bengal Immunity Company Limited Vrs. The State of

Bihar, (1955) 2 SCR 603. The facts of the case were that

the appellant company filed a petition under Article 226 in

the High Court of Patna for a writ of prohibition

restraining the Sales Tax Officer from making an

assessment of sales tax pursuant to a notice issued by

him. The appellant claimed that the sales sought to be

assessed were made in the course of inter-State trade,

that the provisions of the Bihar Sales Tax Act, 1947 (Bihar

Act 19 of 1947) which authorised the imposition of tax on

such sales were repugnant to Article 286(2) and void, and

that, therefore, the proceedings taken by the Sales Tax

Officer should be quashed. The application was dimissed

by the High Court on the ground that if the Sales Tax

Officer made an assessment which was erroneous, the

assessee could·challenge it by way of appeal or revision

under Sections 24 and 25 of that Act, and that as the

matter was within the jurisdiction of the Sales Tax Officer,

no writ of prohibition or certiorari could be issued. There

was an appeal against this order to this Court and therein

a preliminary objection was taken that a writ under

Article 226 was not the appropriate remedy open to an

assessee for challenging the legality of the proceedings

before a Sales Tax Officer. In rejecting the contention, this

Court observed:

WP(C) No.11618 of 2024 Page 43 of 59

„It is, however, clear from Article 265 that no tax can be

levied or collected except by authority of law which must

mean a good and valid law. The contention of the

appellant company is that the Act which authorises the

assessment, levying and collection of Sales tax on inter-

State trade contravenes and constitutes an infringement

of Article 286 and is, therefore, ultra vires, void and

unenforceable. If, however, this contention by well

founded, the remedy by way of a writ must, on principle

and authority, be available to the party aggrieved.‟

And dealing with the contention that the petitioner should

proceed by way of appeal or revision under the Act, this

Court observed:

„The answer to this plea is short and simple. The remedy

under the Act cannot be said to lie adequate and is,

indeed, nugatory or useless if the Act which provides for

such remedy is itself ultra vires and void and the principle

relied upon can, therefore, have no application where a

party comes to Court with an allegation that his right has

been or is being threatened to be infringed by a law which

is ultra vires the powers of the legislature which enacted

it and as such void and prays for appropriate relief under

Article 226.‟

It will be seen that the question which arose in that case

was with reference to a provision in the taxing statute

which was ultra vires and the decision was that any

action taken under such a provision was without the

authority of law and was, therefore, an unconstitutional

interference with the right to carry on business under

Article 19(1)(f). In circumstances somewhat similar in

nature there have been other decision of this Court which

the violation of a fundamental right taken to have been

established when the assessing authority sought to tax a

WP(C) No.11618 of 2024 Page 44 of 59

transaction the taxation of which came within a

constitutional prohibition. Such cases were treated as on

a par with those cases where the provision itself was

ultra vires.”

6.13. In the case at hand the case of the petitioner does not

arise out of misinterpretation of notification by a quasi

judicial authority; rather the notifications were

challenged based on constitutionality. The petitioner

questioned the validity of notifications under which the

levy of IGST on “ocean freight” was sought to be

achieved. The Hon‟ble Supreme Court of India affirmed

the view of the Hon‟ble High Court of Gujarat in Mohit

Minerals Pvt. Ltd. (supra). Under such precinct the

normal course adopted in exercise of powers under

Section 54 read with Section 56 of the GST Act by the

authorities whose orders are under challenge in the

present writ petition cannot withstand judicial scrutiny.

6.14. In the aforesaid perspicuous position of fact matrix and

constitutionality of levy, this Court is called upon to

adjudicate whether the petitioner is entitled to interest

on the IGST paid on ocean freight declared to be

unconstitutional and invalid.

6.15. In an identical set of context, that has arisen in the

instant case, by rendering a Judgment dated 17.10.2025

the Hon‟ble Bombay High Court in West India

Continental Oils Fats Pvt. Ltd. Vrs. Union of India and

WP(C) No.11618 of 2024 Page 45 of 59

others, W.P.(C) No.3000 of 2023 (Neutral Citation:

2025:BHC-OS:19595-DB), having taken note of Mohit

Minerals Pvt. Ltd. (supra), held as follows:

“35. Mr. Mishra, learned counsel for the revenue has

strongly supported the impugned order to submit

that there is no illegality, much less irregularity

therein so as to warrant any interference. He would

in support of his submissions refer to paragraph (iii)

of the Impugned Order. This is to contend that as the

refund claim of IGST Rs.2,62,37,558/ - was

sanctioned/paid by the respondents within the

statutory period of 60 days, the issue of payment of

interest on such amount does not arise. In this

context such submission of Mr. Mr. Mishra does not

assist the case of the Revenue. Such is for the

reason that as noted above, the said amount of IGST

collected from the petitioner by the respondents,

which is now refunded, is not payable at all in law.

This is because such tax based on the said

Notifications were struck down by the Supreme

Court in Mohit Minerals Pvt. Ltd. Followed by

the decision in the petitioner’s own case (supra)

which declared the same to be

unconstitutional. Given such situation, the liability

to pay tax imposed on the Petitioner, on reverse

charge mechanism, by the respondents has no legs

in law to stand on. At this juncture, it is pertinent to

refer to the observation of the Supreme Court in the

case of Mohit Minerals Pvt. Ltd. (supra) as noted

above, that a tax on supply of service, which has

already been included by the legislation as a tax on

composite supply of goods, cannot be permitted. This

WP(C) No.11618 of 2024 Page 46 of 59

would completely be applicable in the given factual

complexion to the case of the petitioner.

36. At this juncture, it may be apposite to refer to the

decision of the Supreme Court in the case of

Ranbaxy Laboratories Ltd. Vrs. Union of India, 2011

(273) ELT 3 (SC) and the following decision in Union

of India Vrs. Hamdard (WAQF) Laboratories, 2016

(333) ELT 193 (SC). The Supreme Court was

considering the interpretation of Section 11BB

of the erstwhile Central Excise Act, 1994 which

is in pari materia to Section 54 and 56 of the

CGST Act. In this context, the Supreme Court

recognized the obligation of the Revenue to pay

the statutory interest within a period of 3

months from the date of receipt of the

application in this regard. Thus, juxtaposing

this with Section 54 and 56 of the CGST Act,

we agree with Mr . Sanghavi that the

respondents cannot shirk the statutory

obligation to pay interest within the time line

of 60 days as stipulated under Section 54 read

with Section 56 of the CGST Act. It would be

apposite to also refer to a recent decision of this

Court in Altisource Business Solutions India Pvt. Ltd.

Vrs. Union of India, Order dated 30th September,

2025 passed in Writ Petition No.5312 of 2024,

where, in similar factual matrix and in the context of

interpreting Section 54 and 56 of the CGST Act

where we have gainfully relied on the decision of the

Supreme Court in the case of Ranbaxy Laboratories

Ltd. (supra). Thus, a conjoint reading of these

decisions would militate against the stand of the

respondents in support of the Impugned Order, in

denying the interest to the Petitioner.

WP(C) No.11618 of 2024 Page 47 of 59

37. Adverting to the above, we are not in

agreement with the submission of Mr. Mishra

that the claim of the petitioner towards grant

of interest is justified under Section 54 and 56

of the CGST Act. This is because Section 54 of

the Act can only be applicable for claiming

refund of any tax which is paid in accordance

with and under the framework of the CGST Act

and its extent provisions. The said Section

would not apply in a situation where revenue

or the respondents have no authority to collect

the IGST paid by the petitioner on reverse

charge mechanism on the ocean freight, from

the date of payment to the date of refund. This

would further be in the teeth of the order of this

Court dated 10th August, 2022 in Writ Petition

No.8318 of 2019 (West India Continental Oils Fats

Pvt. Ltd. Vrs. Union of India) where a coordinate

Bench of this Court has in terms struck down

Notification No.8 of 2017 read with the corrigendum

dated 30 June 2017 to the extent they seek to

impose IGST, to be unconstitutional. This Court

directed that wherever the refund is payable, the

same shall be paid within 8 weeks with applicable

interest, in accordance with law. Thus, it is

incumbent on the respondents to pay interest to the

petitioner on the IGST of Rs.2,62,37,558/- paid

under reverse charge mechanism on ocean freight, in

the given facts and circumstances.”

6.16. The learned Senior Counsel referred to and relied on

certain other decisions rendered in Adi Enterprises Vrs.

Union of India, Misc. Civil Application (For Direction) No.1

of 2020 in R/Special Civil Application No.10479 of 2019,

WP(C) No.11618 of 2024 Page 48 of 59

vide Order dated 08.06.2022 [2022 (64) GSTL 392 (Guj)];

ETC Agro Processing (India) Pvt. Ltd. Vrs. Union of India,

R/Special Civil Application No.1204 of 2021, vide Order

dated 26.04.2023 [(2023) 6 Centax 143 (Guj)].

6.17. In Jupiter Comtex Pvt. Ltd. Vrs. Union of India, R/Special

Civil Application No.1280 of 2024, vide Order 14.02.2024

[2024 (86) GSTL 95 (Guj)] in consideration of challenge as

to the rejection of refund application on the ground that

refund as a result of levy being held to be

unconstitutional, the Hon‟ble High Court of Gujarat held

that,

“5. Learned Advocate for the petitioner submitted that

Notification No.8/2017 and No.10 of 2017 both

dated 28

th June, 2017 read with Corrigendum dated

30

th June, 2017 came up for consideration for their

validity before this Court. This Court in Mohit

Minerals Pvt. Ltd. Vrs. Union of India, down Entry

No.10 of 2017-IGST Rate dated 28th June, 2017 as

being ultra vires the provisions of the IGST Act as

well as being unconstitutional.

5.1. The Supreme Court upheld the decision of this Court

in Mohit Minerals Pvt. Ltd. [reported at (2020) 74

GSTR 134 (Guj) = 2020 SCC OnLine Guj 49] in Union

of India Vrs. Mohit Minerals Pvt. Ltd., (2022) 9 SCR

300.

5.2. The petitioner, therefore, after pronouncement of the

decision of the Apex Court, claimed refund of amount

of tax, interest and penalty paid on ocean freight

under protest along with necessary documents

WP(C) No.11618 of 2024 Page 49 of 59

including certificate of Chartered Accountant

regarding non-passing of the tax burden annexed

with the refund application.

5.3. The respondent No.2, i.e., jurisdictional authority

however issued show-cause notice to the petitioner

proposing to reject such refund on the ground that it

could not be granted by the authority under the GST

Act in respect of levy which was held to be

unconstitutional. The petitioner filed reply requesting

for refund since the amount had been paid under

protest.

5.4. The second respondent, however, rejected the refund

by impugned order on the ground that refund as a

result of levy being held unconstitutional can be

claimed only by way of suit or writ petition and that

the same cannot be granted under Section 54 of the

GST Act.

6. It is trite law that once the Apex Court declares a

Notification being ultra vires and unconstitutional,

such law becomes the law of land and is liable to be

followed by the respondent authorities without

raising any objection. The respondent No.2 could not

have rejected the claim of the petitioner for refund of

ocean freight. The reasons given by the respondent

No.2 in the impugned order for rejection of the refund

claim of the petitioner on the ground that the claim

has been filed based upon the judgment of the Apex

Court in the matter of ocean freight declaring levy of

GST on ocean freight as unconstitutional would not

fall under any category of refund prescribed under

Section 54 of the CGST Act, 2017 and such claim

would be outside the scope of and purview of such

Section and petitioner can claim refund by way of

WP(C) No.11618 of 2024 Page 50 of 59

suit or by way of a writ petition, would not sustain.

Such a stand of the respondent is deprecated as the

respondent is bound by the law declared by the

Supreme Court and the same is required to be

implemented in letter and spirit. The respondent

No.2, therefore, could not have rejected the refundi

claim of the petitioner on the ground that the same is

outside the scope of Section 54 of the CGST Act,

2017 inasmuch as when the Notification for levy of

IGST on ocean freight is held to be unconstitutional,

the petitioner is entitled to the refund of such IGST

on ocean freight paid under protest.

6.1. It is also pertinent to note that the petitioner has

placed on record certificate of Chartered Accountant

that the petitioner has not passed on the tax burden

and therefore, refund also cannot be denied to the

petitioner on the principle o unjust enrichment as per

the decision of the Apex Court in case of Mafatlal

Industries Ltd. Vrs. Union of India, (1998) 5 SCC

536.

6.2. In support of such submission, petitioner also placed

reliance on the following decisions:

(a) Bharat Oman Refineries Ltd. Vrs. Union of

India, (2020) 120 taxmann.com 301 (Specia

Civil Application No. 8881 of 2020, dated

18.08.2020);

(b) Torrent Power Ltd. Vrs. Union of India, (2022)

142 taxmann.com 314 (Special Civil Application

No. 2603 of 2021, dated 04.08.2022);

(c) Sandesh Ltd. Vrs. Union of India, (2022) 41

taxmann.com 529 (Special Civil Application No.

12757 of 2021, dated 04.08.2022).

WP(C) No.11618 of 2024 Page 51 of 59

7. Considering the above legal position, the petitioner is

entitled to the refund of ocean freight paid under

protest in vie of the decision of the Apex Court in

case of Mohit Minerals Pvt. Ltd. (supra) since the

impugned Notification has already be declared as

ultra vires and accordingly, the present petition

deserves to be allowed.

8. In view of the foregoing reasons, the claim for refund

of the petitioner towards ocean freight is required to

favourably considered and respondent No.2 is

directed to verify the amount of refund and grant

such refund of the amount IGST paid on ocean

freight by the petitioner pursuant to the Entry No.10

of the above notification within eight weeks from

date of receipt of copy of this order along with the

statutory rate of interest.”

6.18. It can be culled out from the above that consistent view

has been expressed to the effect that interest is to be

awarded in favour of the taxpayer who has paid the IGST

on ocean freight. It is, thus, settled that when the levy of

tax is found to be illegal and unconstitutional by

quashment of statutory notifications, interest is liable to

be paid on the amount of refund, even as the statute is

silent regarding award of interest with respect to such

eventuality.

6.19. It transpires from paragraph 9 of the Appellate Order

(Annexure-10), before the Appellate Authority a clear

stance was taken by the petitioner that “Once any

provision is struck down by the Hon‟ble Supreme Court

WP(C) No.11618 of 2024 Page 52 of 59

of India, the same is deemed to have never existed.

Hence, interest is to be granted from the date of payment

of tax. The Government is not entitled to withhold the

tax without authority of law. Hence, Department is liable

to pay interest to the taxpayer from the date of actual

payment.” As is well-established that the law declared by

the Hon‟ble Supreme Court of India is the law from the

inception. On the notifications based on which the IGST

on “ocean freight” was levied and collected by the

opposite parties being struck down as invalid, there is

no doubt in mind that the petitioner is entitled to

compensation by way of award of interest on the amount

retained for the period from the date of deposit till the

date of its actual refund.

6.20. In Vijaya Vasava Motors Vrs. Assistant Commissioner,

(2009) 19 VST 322 (AP) it has been held as follows:

“16. The decision of the Supreme Court, enunciating a

principle of law, is applicable to all cases

irrespective of the stage of its pendency. The law

laid down by the Supreme Court must be held

to be the law from the inception, unless the

Supreme Court itself indicates that its decision

will operate prospectively. It is not open for

Courts/Tribunals to apply the law laid down by the

Supreme Court only from the date on which the

judgment came to be passed. (M.A. Murthy Vrs.

State of Karnataka, (2007) 4 ALD 105, G. Raja Babu

Vrs. The Government of Andhra Pradesh, (2007) 4

ALD 105).

WP(C) No.11618 of 2024 Page 53 of 59

17. The Supreme Court has not held that its judgment,

in Mohd. Ekram Khan & Sons, (2004) 136 STC 515

(SC), is prospective in its application. Prospective

overruling is resorted to by the Supreme Court while

superseding the law declared by it earlier. It is a

device innovated to avoid reopening of settled

issues, to prevent multiplicity of proceedings, and to

avoid uncertainty and avoidable litigation. It is for

the Supreme Court to indicate whether the decision

in question will operate prospectively. In other

words, there shall be no prospective overruling,

unless it is so indicated in the particular decision.

(M.A. Murthy, (2007) 4 ALD 105). The doctrine of

prospective overruling can be invoked only in

matters arising under the Constitution and can be

applied only by the Supreme Court as it has the

Constitutional jurisdiction to declare law binding on

all the courts in India. (I.C. Golak Nath Vrs. State of

Punjab, AIR 1967 SC 1643, State of H. P. Vrs.

Nurpur Private Bus Operators‟ Union, (1999) 9 SCC

559, G. Raja Babu, (2007) 4 ALD 105). In the

absence of any direction by the Supreme Court

that the rule laid down by it would be

prospective in operation, any finding recorded

that the rule laid down by the Supreme Court

would be applicable only to cases arising from

the date of the judgment of the Court cannot be

accepted. (Sarwan Kumar Vrs. Madan Lal

Aggarwal, (2003) 4 SCC 147, G. Raja Babu, (2007) 4

ALD 105).

18. Since the power to hold that a judgment of the

Supreme Court will apply prospectively does not

enure even in the High Courts, the Government could

not have held that the said judgment would only

WP(C) No.11618 of 2024 Page 54 of 59

have prospective operation. The action of the

Government, in doing so, in its order in G. O. Ms. No.

144 dated February 11, 2008, in effect, amounts to

declaring that the judgment of the Supreme Court in

Mohd. Ekram Khan & Sons, (2004) 136 STC 515

(SC) would not apply to matters which are either

pending before statutory authorities or the STAT or

even the High Court merely because they relate to

assessment years prior to the date of the judgment

of the Supreme Court, i.e., prior to July 21, 2004. A

declaration that an order made by a court of law is

void is normally a part of the judicial function. Even

the Legislature, let alone the executive, can neither

declare that the decision rendered by the court is not

binding or is of no effect, (People‟s Union for Civil

Liberties (PUCL) Vrs. Union of India (2003) 4 SCC

399), nor has it the power to ask that decisions

given by courts be disobeyed or disregarded.

[Municipal Corporation of the City of Ahmedabad

Vrs. New Shrock Spg. and Wvg. Co. Ltd., (1970) 2

SCC 280]. Exercise of power by the executive must

be in accordance with law. If exercise of the power of

judicial review by the Supreme Court can be set at

naught by the State Government, overriding the

decision, it would sound the death knell of the rule

of law. [P. Sambamurthy Vrs. State of Andhra

Pradesh (1987) 1 SCC 362].”

6.21. It may be relevant to notice what was observed in

Himmatlal Harilal Metha Vrs. The State of Madhya

Pradesh, (1954) 1 SCC 405:

“10. In Mohd. Yasin Vrs. Town Area Committee, (1952) 1

SCC 205 = 1952 SCR 572, it was held by this Court

that a licence fee on a business not only takes away

WP(C) No.11618 of 2024 Page 55 of 59

the property of the licensee but also operates as a

restriction on his fundamental right to carry on his

business and therefore if the imposition of a licence

fee is without authority of law it can be challenged

by way of an application under Article 32, a fortiori

also, under Article 226. These observations have

apposite application to the circumstances of the

present case. Explanation II to Section 2(g) of

the Act having been declared ultra vires, any

imposition of sales tax on the appellant in

Madhya Pradesh is without the authority of

law, and that being so a threat by the State by

using the coercive machinery of the impugned

Act to realise it from the appellant is a

sufficient infringement of his fundamental

right under Article 19(1)(g) and it was clearly

entitled to relief under Article 226 of the

Constitution. The contention that because a

remedy under the impugned Act was available to the

appellant it was disentitled to relief under Article

226 stands negatived by the decision of this Court in

State of Bombay Vrs. United Motors (India) Ltd.,

(1953) 1 SCC 514 = 1953 SCR 1069, above referred

to. There it was held that the principle that a court

will not issue a prerogative writ when an adequate

alternative remedy was available could not apply

where a party came to the Court with an allegation

that his fundamental right had been infringed and

sought relief under Article 226. Moreover, the

remedy provided by the Act is of an onerous and

burdensome character. Before the appellant can

avail of it he has to deposit the whole amount of the

tax. Such a provision can hardly be described as an

adequate alternative remedy.”

WP(C) No.11618 of 2024 Page 56 of 59

6.22. It is not gainsaid that the petitioner-Company has

deposited the IGST on the value of goods imported by

including therein the amount of “ocean freight”, which

was disclosed in the returns and the said amount stands

refunded in its favour after the decision was rendered in

Mohit Minerals Pvt. Ltd. (supra) and in pursuance of

Order dated 01.08.2022 passed in WP(C) No.1684 of

2019 in its own case. This Court is, therefore, inclined to

hold that it is entitled to interest at the rate of 6% per

annum from the date of such deposit shown to have

been made by the petitioner.

6.23. Therefore, the opposite parties cannot resile from their

obligation to pay interest on the amount refunded as the

very levy/exigibility of IGST on “ocean freight” in CIF

contract are held to be unconstitutional.

Conclusion:

7. With the factual and legal position as discussed above, it

is manifest that the IGST collected on the quantum of

“ocean freight” on the basis of Notifications dated

28.06.2017 is found to be illegal and in pursuance of

Order dated 01.08.2022 of this Court in the petitioner‟s

own case the Revenue has refunded the amount. It is in

dispute whether the petitioner is entitled to interest on

said refunded amount from the date of its deposit as the

levy itself was declared not in consonance with the

WP(C) No.11618 of 2024 Page 57 of 59

constitutional provisions. There is nothing in Mohit

Minerals Pvt. Ltd. (supra) to comprehend that the

interpretation and declaration of the Hon‟ble Supreme

Court of India would operate prospectively.

7.1. Regard being had to the conspectus of very many

judgments on the subject as referred to in the foregoing

paragraphs, it is unequivocal that the decision of the

Hon‟ble Supreme Court of India unless spell s out

explicitly to have prospective effect, the same is to be

understood as existing from the inception. In the

absence of any direction by the Hon‟ble Supreme Court

of India that the interpretation set forth or law laid down

by it would be prospective in operation, the argument of

the Revenue to avoid payment of interest that the refund

flows from the ruling of the Hon‟ble Supreme Court of

India in Mohit Minerals Pvt. Ltd. (supra) and the

department having refunded the IGST so collected to the

petitioner in consideration of application under Section

54 of the GST Act in this respect within the period

stipulated in the statute cannot be accepted.

7.2. In such view of the matter, this Court cannot sustain the

Order dated 15.01.2024 passed by the Additional

Commissioner, GST (Appeals) in Order-in-Appeal

No.158/GST/BBSR/ADC/2023-24 affirming the Order

dated 06.02.2023 passed by the Assistant

Commissioner, Central GST and Central Excise,

WP(C) No.11618 of 2024 Page 58 of 59

Cuttack-II Division, Cuttack in Form RFD-06 refusing to

grant interest on the amount of refund. Hence, the Order

dated 15.01.2024 vide Annexure-10 is set aside and

Order dated 06.02.2023 vide Annexure-8 is quashed.

Therefore, taking cue from the Order dated 05.08.2024

passed in the instant case, as referred to above, this

Court directs the opposite parties to pay interest on the

amount of the IGST as refunded.

7.3. Since the question involved in the present case relates to

interest on amount refunded, it is clear that the

petitioner is entitled to interest on the amount refunded

with respect to IGST collected on “ocean freight” for the

period the opposite parties retained the same and

restrained the petitioner from utilising it. In other words,

such interest should commence to run from the date on

which the petitioner parted with the money in the first

instance and was restrained from using such amount

representing the IGST on the component of “ocean

freight”.

7.4. The refund itself is as a result of a finding that the tax

ought not to have been collected from the petitioner in

the first place. If the tax has to be refunded, and in fact,

has been refunded to the petitioner, clearly, therefore, in

the considered view of the Court, the interest thereon

should begin to run from the date of the deposit of such

tax. Consequently, the opposite party-competent

WP(C) No.11618 of 2024 Page 59 of 59

authority will pay to the petitioner simple interest @6%

per annum on the amount of refund from the period

beginning with the date of making payment of the IGST

on “ocean freight” in the first instance till the date of

actual payment of refund made which shall not be more

than eight weeks from today. If there is any further delay

than the said period in payment of interest on the

refunded amount, the authority concerned will be liable

to pay simple interest @9% per annum on the sum

refunded for the period of delay.

8. With the aforesaid observations and directions, the writ

petition stands disposed of and pending Interlocutory

Application(s), if any, is also disposed of, but in the

circumstances there shall be no order as to costs.

I agree.

(HARISH TANDON) (MURAHARI SRI RAMAN)

CHIEF JUSTICE JUDGE

High Court of Orissa, Cuttack

The 22

nd January, 2026// Aswini/Laxmikant