REFUND OF IGST ON OCEAN FREIGHT CAN BE CLAIMED AFTER SC RULING: EXPERTS

New Delhi, May 22: Taxpayers who have paid GST on 'ocean freight' on imported goods will be entitled to claim refunds, following the Supreme Court verdict, provided they have not claimed input tax credit, experts said. Giving its ruling in the Mohit Minerals case, the Supreme Court held that since the Indian importer is liable to pay IGST on the 'composite supply', comprising supply of goods and supply of services of transportation, insurance, etc in a CIF (cost iInsurance freight) contract, a separate levy on the Indian importer for the 'supply of services' by the shipping line would be in violation of ... the CGST Act.

In this particular case, the company had challenged the validity of the CBIC notification regarding levy of Integrated GST on ocean freight in the Gujarat High Court. The Supreme Court upheld the decision of the Gujarat High Court which had favoured the company.

Tax Connect Advisory Services partner Vivek Jalan said this is a big relief for importers and GST taxpayers. "In fact those taxpayers who had already paid the GST may also seek a refund of the same now".

Naresh Sheth, partner, N.A. Shah Associates, said, "Such levy, in substance, was a tax on transactions between two foreign parties taking place outside India which apparently is beyond the territorial jurisdiction of the Indian government."

Jalan further said generally, the value of imported goods is CIF and includes the cost, insurance and freight components. Hence customs duty and GST is charged on such value.

"However, CBIC also sought to levy GST @5 per cent on the value of imported goods considering 10 per cent of the value of imported goods as deemed ocean freight," Jalan added.

This is a dual levy of IGST, AMRG & Associates senior partner Rajat Mohan said.