SC Strikes Down IGST On Ocean Freight

Supreme Court strikes down levy of IGST on Ocean Freight

UOI vs Mohit Minerals Pvt. Ltd.

Introduction

• The Supreme Court in its landmark ruling in the case of UOI vs. Mohit Minerals Pvt. Ltd. [C.A. No. 1390 of 2022] has struck down the levy of IGST on importers in respect of ocean freight services- which are provided by foreign shipping lines to foreign suppliers in a CIF contract for import of goods into India.

• This decision has been passed on the ground that that a CIF contract for import of goods forms a composite supply, comprising of supply of goods and supply of services of transportation, insurance, etc., on which the Indian importer discharges IGST. Thus, a separate levy of IGST on the service aspect of the transaction would violate the principle of composite supply under Section 8 of Central Goods and Services Tax Act, 2017 (CGST Act). While dealing with the argument of the Union that recommendations of GST Council are binding on Union and