High Court has agreed to hear a bunch of petitions filed by importers
challenging the levy of Integrated Goods and Services Tax (IGST) on Ocean
Freight. The plea, moved by Mumbai-based importer Victory Ventures, challenges
a June 2017 notification by which the central government had clarified as to
who constituted the exporter, importer and the service provider in case freight
came into India via the Ocean.
GST laws, importers are required to pay 5 per cent IGST on ocean freight
services under reverse charge mechanism
to the notification, while the supplier of a service, or the exporter, is a
person located in a non-taxable territory of India, the recipient of the
service is the importer. Under GST laws, importers are required to pay 5 per
cent IGST on ocean freight services under reverse charge mechanism. The
importer pays this duty on behalf of the foreign buyers. Further, the importer
also pays customs duty on the Cost, Insurance, and Freight (CIF) value of the
product being imported via the ocean.
taxability of ocean freight has been a subject matter of dispute for some time
now. The moot point is whether the importer of goods who is not the service
recipient for freight as per the statutory definition and otherwise is liable
to pay tax under the reverse charge mechanism”, said Abhishek A Rastogi,
partner at law firm Khaitan & Co and advocate for the petitioners.
argues govt notification arbitrary
plea, the petitioners said that the transaction sought to be taxed by the
government was the service of transportation of goods in a vessel provided by a
shipping line not registered in India, to a person situated outside the taxable
territory of India. The notification, therefore, was arbitrary in nature, the petitioners
has stayed imposition of IGST on ocean freight
similar case heard last month, the Gujarat High Court had stayed the imposition
of IGST on ocean freight.
is slated to hear the case on June 19.