Notice to be issued to GST authorities for charging IGST under RCM on Ocean Freight: Gujarat HC

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Facts:

India Coke and Power (P.) Ltd. (“the Petitioner”) filed a writ petition before Hon’ble Gujarat High Court challenging applicability of GST on Ocean Freight under Reverse Charge Mechanism (“RCM”) in terms of Notification No. 08/2017 – Integrated Tax (Rate) dated June 28, 2017 (“rate notification”) read with Notification No. 10/2017 – Integrated Tax (Rate), dated June 28, 2017.

Issue:

Whether the Petitioner can be granted interim relief from the payment of GST on Ocean Freight?

Held:

The Hon’ble Gujarat High Court in R/Special Civil Application No. 11410 dated July 03, 2019 issued notice returnable on July 17, 2019 and directed that, no coercive steps shall be taken against the Petitioner pursuant to the impugned notification. This Court passed the order pursuant to its following observations held by themselves in the case of Mohit Minerals (P.) Ltd. v. Union of India Special Civil Application No.726 of 2018, dated February 08, 2018:

  • The Petitioner having paid the tax under IGST Act on the entire value of imports i.e. inclusive of the ocean freight, cannot be asked to pay tax on the ocean freight all over again under a different notification.
  • In case of CIF contracts, the service provider and service recipient both are outside the territory of India. No tax on such service can be collected even under RCM.
  • In case of High Sea sales, the burden is cast on the Petitioner as an importer whereas, the Petitioner is not the recipient of the service at all. It is the petitioner’s seller of goods on high sea basis who has received the services from the exporter/transporter.

Citation: [2019] 108 taxmann.com 500 (Gujarat)

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