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2020 ] IGST ON OCEAN FREIGHT IN CASE OF IMPORT OF GOODS ON CIF BASIS J11

IGST ON OCEAN FREIGHT IN CASE OF IMPORT OF GOODS ON CIF BASIS
IGST ON OCEAN FREIGHT IN CASE OF
IMPORT OF GOODS ON CIF BASIS —
HELD UNCONSTITUTIONAL
IGST ON OCEAN FREIGHT IN CASE OF IMPORT OF GOODS ON CIF BASIS
By
CA Krishan Kumar Sharma, ACA, B.Com.

Background
The levy of IGST on ocean freight element of cost
of imported goods under reverse charge basis, even as
IGST is paid on CIF value, has been a debatable issue
since implementation of GST. Various assessees have filed writ petitions chal-
lenging the legality and validity of the provisions related to levy of IGST under
reverse charge on ocean freight in case of import of goods on CIF basis. Recently,
Hon’ble Gujarat High Court in case of Mohit Minerals (P.) Ltd. (Special Civil Ap-
pln. Nos. 726 of 2018, 1984, 1988 of 2019 & Oths., dated 23rd January, 2020) has
passed an order in this matter [2020 (33) G.S.T.L. 321 (Guj.)].
In the subsequent paras, we would discuss the relevant provisions relat-
ed to applicability of IGST under reverse charge on ocean freight in case of im-
port of goods on CIF basis and findings given by the Hon’ble Gujarat High Court
while passing the order.
Relevant provisions
Section 5(3) of Integrated Goods and Services Tax Act, 2017 (IGST Act,
2017) provides that the Government on the recommendations of the GST Coun-
cil, by notification, specify categories of supply of goods or services or both on
which GST shall be paid on reverse charge basis by the recipient of such goods or
services or both. Accordingly, the Government can specify the services on which
IGST is required to be paid by recipient under reverse charge.
Entry No. 10 of Notification No. 10/2017-I.T. (Rate), dated 28th June,
2017 which is issued under Section 5(3) of IGST Act, 2017 provides as under :

Sl. Category of Supply of Supplier of Recipient of Service
No. Services service
10 Services supplied by a person A person Importer, as defined
located in non-taxable territory located in in clause (26) of sec-
by way of transportation of non-taxable tion 2 of the Customs
goods by a vessel from a place territory Act, 1962 (52 of 1962),
outside India up to the customs located in the taxable
station of clearance in India. territory.

Entry No. 9(ii) of Notification No. 8/2017-I.T. (Rate), dated 28th June,
2017 provides as under :

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