Levy of IGST under RCM on Ocean Freight held Unconstitutional by SC Analysis of Judgement and Way forward for Taxpayers

With the passage of almost 5 years of GST, there have been many areas where there has been disputes between the Authorities and the taxpayers regarding the taxability of transactions. One such area is the imposition of tax on Ocean Freight services especially when import is on CIF basis. While on the CIF value, one gets to pay Customs duties as well as IGST on the value of the imports, there has been an artificial levy of IGST on the freight component treating the same as chargeable to GST under Reverse Charge Mechanism as well. Now, the Hon’ble Supreme Court has laid to rest the anomaly in the space of levy of Reverse Charge Mechanism on the Ocean Freight element. The Hon’ble Supreme Court has upheld the judgement of the Gujarat High Court that in a CIF contract, a separate levy on the Indian importer for the 'supply of services' by the shipping line would be in violation of Section 8 of the CGST Act. Read more...