The Bombay High Court has stayed GST recovery proceedings against Gateway Terminals India in a Rs 170 crore dispute over denied input tax credit on JNPT licence fees. The interim order protects the company from action until March 4, 2026.
MUMBAI: The Bombay High Court has temporarily halted recovery proceedings against Gateway Terminals India Pvt Ltd in a Rs 170 crore Goods and Services Tax (GST) dispute. This follows the tax authorities’ refusal to grant the company input tax credit (ITC) on license fees paid to the Jawaharlal Nehru Port Trust (JNPT).
In the GST framework, input tax credit allows businesses to offset the tax they paid on purchases against their tax obligations for sales. The denial of ITC can considerably raise costs for companies operating under long-term infrastructure and concession agreements.
A division bench consisting of Justices G.S. Kulkarni and Aarti Sathe issued an interim order instructing the tax department to refrain from any further recovery actions against the company until the next hearing scheduled for March 4, 2026.
Gateway Terminals, a joint venture between JNPT and the Container Corporation of India, operates a container terminal at JNPT under a 30-year licensing agreement. As part of this contract, it pays license fees for access to port infrastructure and has been fulfilling its indirect tax obligations initially service tax and subsequently GST on these payments.
The contention arose when tax authorities denied the company’s claim for ITC, arguing that the underlying transaction does not qualify as a “service” eligible for credit under GST regulations. The department also refused to issue a refund for the tax already paid on the same transaction.
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Representing Gateway Terminals, a tax expert argued that the department’s position was self-contradictory. He explained that the authorities were rejecting the ITC claim by asserting the transaction was not a service while simultaneously refusing to refund tax collected on that same transaction.
Emphasizing that such a stance violates the principle of revenue neutrality, he contended,
“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,”
After reviewing the justifications cited in the disputed order that rejected both ITC and the refund, the court ruled that no coercive recovery actions should be taken against the petitioner until the adjourned date.
The court also issued a notice to the respondents, directing the government to submit its reply affidavit within three weeks.