No IGST is payable on ocean freight under RCM on contracts of CIF imports

Last updated: 13 June 2022

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Quick Summary

The Supreme Court of India has ruled that Integrated Goods and Services Tax (IGST) is not payable on ocean freight for imports made on a Cost, Insurance, and Freight (CIF) basis. The court determined that such imports constitute a composite supply of goods, and levying a separate IGST on the ocean freight component under the Reverse Charge Mechanism would amount to double taxation. Additionally, the court clarified that recommendations from the GST Council hold persuasive value but are not binding on the Union and State governments.

Court :
Supreme Court of India

Brief :
The Apex Court rightly upheld upheld the judgement pronounced by the Hon'ble Gujarat High Court and held that no IGST is payable on ocean freight under Reverse Charge Mechanism (RCM) on contracts of Cost, insurance, and freight (CIF) imports of goods by the Indian importers since it is a composite supply of goods on which IGST is liable to be paid under Section 5(1) of the IGST Act read with Section 20 of the IGST Act, Section 8 and Section 2(30) of the CGST Act. No separate levy of IGST under RCM is to be made on the Indian importer for the supply of services of transportation of goods by the shipping line since it would be in violation of Section 8 of the CGST Act, 2017. The Court further stated that the recommendations of GST Council is not binding on Union and State Governments.

Citation :
Civil Appeal No. 1390 of 2022

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