The Central Board of Indirect Taxes and Customs (CBIC), mentioned that the GST department does not question the decision of the Apex court in Mohit minerals in which the Supreme court would have stopped the IGST charge on the ocean freights.
A circular issued on 4th November stated that “Please refer to your letter F. No. WHLCIMumCen/WICOF12019 dated 09.09.2022 and subsequent reminders dated 20.09.2022 and 03.10.2022, on the afore-mentioned subject. In this regard, it is informed that the Board has decided not to the Review Petition in the subject matter. This is for your information for further action at your end if any.”
A division bench of the Supreme Court comprising Justice Dr Dhananjaya Y Chandrachud, Justice Surya Kant, and Justice Vikram Nath was recognizing a plea that has been furnished via Mohit Minerals Pvt Ltd challenged vires of the CBIC notification.
The petition consists of 3 components. First securing paid tax under the IGST act on the whole import value (inclusive of the ocean freight), the applicant could not seek to pay the tax on the ocean freight repeatedly beneath the distinct notification. The other is for the case of CIF (cost, insurance, and freight) contracts, the service provider along with the service recipient is outside the territory of India.
There shall be no tax on the same service that could get collected on the reverse charge mechanism. And the last one is for the case of High sea sales the load in the cast on the petitioner as an importer in which the applicant would not be the recipient of the service at all. The same is the applicant’s seller of goods on a high sea basis who has obtained the services via the exporter/transporter.
In former times, the High court ruled that the GST law furnishes, the importers needed to provide the IGST with a 5% rate on the services of ocean freight beneath the Reverse Charge Mechanism (RCM) under which the importer duty obligated to pay IGST on grounds of the foreign buyer.
But at that time the customs duty on the CIF value (consisting of the elements of freight) of the goods imported in India would be paid via the importer. There shall be double taxation on the elements of the ocean freight beneath the GST act which would interrupt and increase the import cost.
Post to the decision of the Supreme court, the Gujarat High court would have rendered CBIC to provide the refund of the goods and services tax furnished on the ocean freight in 6 weeks with the interest in ease for the importers.
