IGST: Taxpayers can now declare refund of IGST on ocean freight: Specialists on SC judgement


Taxpayers who’ve paid GST on ‘Ocean Freight‘ on imported items might be entitled to say refunds, following the Supreme Court docket verdict, offered they haven’t claimed enter tax credit score, specialists mentioned.

Giving its ruling within the Mohit Minerals case, the Supreme Court docket held that because the Indian importer is liable to pay IGST on the ‘composite provide’, comprising of provide of products and provide of companies of transportation, insurance coverage, and many others in a CIF (Price Insurance coverage Freight) contract, a separate levy on the Indian importer for the ‘provide of companies’ by the delivery line could be in violation of … the CGST Act.

On this specific case, the corporate had challenged the validity of the CBIC notification concerning levy of Built-in GST on ocean freight within the Gujarat Excessive Court docket. The Supreme Court docket upheld the choice of the Gujarat Excessive Court docket which had favoured the corporate.

Tax Join Advisory Companies Companion Vivek Jalan mentioned this can be a huge aid for importers and GST taxpayers. “Infact these taxpayers who had already paid the GST may search a refund of the identical now”.

Dhruva Advisors Companion Naresh Sheth mentioned, “Such levy, in substance, was a tax on transactions between two overseas events going down outdoors India which apparently is past the territorial jurisdiction of the Indian Authorities.”

Jalan additional mentioned typically, the worth of imported items is CIF and contains the Price, Insurance coverage and Freight elements. Therefore Customs Responsibility and GST is charged on such worth.

“Nevertheless, CBIC additionally sought to levy GST @5 per cent on the worth of Imported items contemplating 10 per cent of the worth of imported items as deemed ocean freight,” Jalan added.

AMRG & Associates Senior Companion Rajat Mohan mentioned the Supreme Court docket has upheld the Gujarat Excessive Court docket judgement categorizing the levy of IGST on ocean freight companies as unconstitutional.

It is a twin levy of IGST as the identical has already suffered tax as a part of the worth of products. Furthermore, these companies are acquired by the overseas exporter, thus the Indian importer shall not be held liable to pay GST on the identical, he mentioned.

“By this, a window of alternative has been opened for the importers who’ve already paid the tax to demand refund from the exchequer,” Mohan added.

Federation of Indian Export organisations (FIEO) DG Ajay Sahai mentioned FIEO has already represented that ocean freight on items imported on CIF foundation shouldn’t be charged as it’s tantamount to double taxation, including to the liquidity downside.

“Whereas the set off of IGST on imports was out there however after a time lag, it was including to the challenges for producers and exporters,” Sahai mentioned.

Nangia Andersen LLP, Director- Oblique Tax, Tanushree Roy mentioned levy of reverse cost on ocean freight is now unconstitutional in view of the landmark judgement of the Supreme Court docket of India in ocean freight matter.

“Indian importers (who had paid GST underneath RCM on Ocean Freight) ought to consider the potential of submitting refund claims for claiming the mentioned quantities (to the extent not utilized as enter credit score).

“Additional, importers who had not paid the tax on import of such Ocean Freight companies would not be required to pay GST on such companies in view of the mentioned judgement,” Roy mentioned.

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