Bombay High Court stays ₹170 crore GST recovery against Gateway Terminals | Company News

 

Under the GST regime, input tax credit allows businesses to adjust the tax paid on purchases against the tax liability on their outward supplies. Denial of ITC can significantly increase costs for companies operating under long-term infrastructure and concession agreements.
 

A division bench comprising Justices G S Kulkarni and Aarti Sathe, in an interim order dated February 4, directed the tax department not to take any further recovery steps against the company until the next hearing on March 4, 2026.

 
 

Gateway Terminals, a joint venture between JNPT and Container Corporation of India, operates a container terminal at JNPT under a 30-year licensing arrangement. Under this agreement, it pays licence charges for the right to use port infrastructure and has been discharging indirect taxes — first service tax and later GST — on such payments.
 

The dispute arose after tax authorities rejected the company’s claim for ITC on the ground that the underlying transaction does not qualify as a “service” eligible for credit under GST law. The department also denied a refund of tax already paid on the same transaction.
 

Appearing for Gateway Terminals, Abhishek A Rastogi, founder of Rastogi Chambers, argued that the department’s stand was internally contradictory. He submitted that the authorities were denying ITC by claiming the transaction was not a service, while simultaneously refusing to refund tax collected on that very transaction.
 

“The core issue before the court is whether the department can, on the one hand, deny ITC by asserting that the transaction is not a service, and on the other hand, also deny refund of the tax collected on that very transaction,” Rastogi argued, adding that such a stand goes against the principle of revenue neutrality.
 

After considering the reasons recorded in the impugned order rejecting both ITC and refund, the court held that no coercive recovery action should be taken against the petitioner until the adjourned date. The court issued notice to the respondents and directed the government to file its reply affidavit within three weeks.