Taxpayers who’ve paid GST on ‘Ocean Freight’ on imported items can be entitled to say refunds, following the Supreme Court verdict, supplied they haven’t claimed enter tax credit score, consultants stated.
Giving its ruling within the Mohit Minerals case, the Supreme Court held that because the Indian importer is liable to pay IGST on the ‘composite supply’, comprising of provide of products and provide of providers of transportation, insurance coverage, and so forth in a CIF (Cost Insurance Freight) contract, a separate levy on the Indian importer for the ‘supply of services’ by the transport line can be in violation of … the CGST Act.
In this explicit case, the corporate had challenged the validity of the CBIC notification relating to levy of Integrated GST on ocean freight within the Gujarat High Court. The Supreme Court upheld the choice of the Gujarat High Court which had favoured the corporate.
Tax Connect Advisory Services Partner Vivek Jalan stated it is a huge aid for importers and GST taxpayers. “Infact those taxpayers who had already paid the GST may also seek a refund of the same now”.
Naresh Sheth, Partner, N A Shah Associates stated, “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 additional stated typically, the worth of imported items is CIF and contains the Cost, Insurance and Freight elements. Hence Customs Duty and GST is charged on such worth.
“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.
AMRG & Associates Senior Partner Rajat Mohan stated the Supreme Court has upheld the Gujarat High Court judgement categorizing the levy of IGST on ocean freight providers as unconstitutional.
This is a twin levy of IGST as the identical has already suffered tax as a part of the worth of products. Moreover, these providers are acquired by the international exporter, thus the Indian importer shall not be held liable to pay GST on the identical, he stated.
“Through this, a window of opportunity has been opened for the importers who have already paid the tax to demand refund from the exchequer,” Mohan added.
Federation of Indian Export organisations (FIEO) DG Ajay Sahai stated FIEO has already represented that ocean freight on items imported on CIF foundation shouldn’t be charged as it’s tantamount to double taxation, including to the liquidity downside.
“While the set off of IGST on imports was available but after a time lag, it was adding to the challenges for manufacturers and exporters,” Sahai stated.
Nangia Andersen LLP, Director- Indirect Tax, Tanushree Roy stated levy of reverse cost on ocean freight is now unconstitutional in view of the landmark judgement of the Supreme Court of India in ocean freight matter.
“Indian importers (who had paid GST below RCM on Ocean Freight) ought to consider the potential of submitting refund claims for claiming the stated quantities (to the extent not utilized as enter credit score).
“Further, importers who had not paid the tax on import of such Ocean Freight services would no longer be required to pay GST on such services in view of the said judgement,” Roy stated.
Source: www.financialexpress.com”