Bombay High Court Exonerates Service Providers from Green Cess Liability at Mormugao Port
Court Rules in Favor of South West Port Limited, Quashes Show Cause Notices for Reassessment
In a significant ruling, the Bombay High Court, Goa bench, delivered a verdict on September 29, 2025, favoring South West Port Limited (SWPL) and other petitioners by quashing the show cause notices issued for reassessment under the Goa Cess on Products and Substances Causing Pollution (Green Cess) Act, 2013. The court held that service providers operating at Mormugao Port are not liable to pay the Green Cess, as they neither bring nor cause the entry of polluting substances into the state.
The division bench, comprising Justices Bharati Dangre and Nivedita P. Mehta, ruled that the Green Cess should only be levied on entities that bring or cause the entry of products or substances causing pollution into Goa. The court found that SWPL, which operates cargo handling services at the port, did not have any proprietary interest in the cargo and was merely providing services, thus exempting it from the cess liability.
The court also addressed the issue of reassessment under the Goa Value Added Tax Act, 2005, deeming the reassessment proceedings arbitrary and invalid due to a lack of "reasons to believe" that any turnover had escaped assessment. The court emphasized that the reassessment notices issued were time-barred, exceeding the statutory eight-year limitation period.
The ruling was a result of consolidated petitions filed by SWPL and JSW Infrastructure Ltd. (JSWIL), both engaged in port operations at Mormugao. The petitioners argued against their liability for the Green Cess, contending that they were not importers or users of polluting products but service providers.
Additionally, the court dismissed the challenge against Rule 3 of the Goa Green Cess Rules, 2014, rejecting claims of excessive delegation. The court concluded that Rule 3 provides a reasonable mechanism for cess assessment and collection without contradicting the statutory provisions of the Green Cess Act.
The judgment is expected to have significant implications for service providers at the port, clarifying their exclusion from Green Cess liability unless they directly import or handle polluting substances.
Bottom Line:
Green Cess - Reassessment of Green Cess under the Goa Cess on Products and Substances Causing Pollution (Green Cess) Act, 2013 - Petitioners as service providers are not liable for Green Cess as they neither brought nor caused to be brought products or substances causing pollution into the State - Rule 3 of the Goa Green Cess Rules, 2014 does not suffer from the vice of excessive delegation as it provides the mechanism for levy and collection of Cess without contradicting the statutory provisions.
Statutory provision(s): Goa Cess on Products and Substances Causing Pollution (Green Cess) Act, 2013, Goa Green Cess Rules, 2014, Goa Value Added Tax Act, 2005
South West Port Limited v. State of Goa, (Bombay)(Goa)(DB) : Law Finder Doc id # 2795412
