Dissecting the Legality of IGST on Ocean Freight for FOB Imports: Refund of IGST

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..... ges for imports, even when IGST had already been paid on the value of goods, including freight charges. The article examines the contentions put forth by the petitioner, a private limited company engaged in the import of coking coal, challenging the withdrawal of a previously sanctioned refund of IGST paid on ocean freight charges for FOB imports. The petitioner argues that the levy of IGST on ocean freight charges for FOB imports is ultra vires the provisions of the IGST Act and violates Articles 14 and 265 of the Constitution of India. 2. ARGUMENTS PRESENTED Petitioner's Contentions: * The petitioner imported coking coal on both Cost, Insurance, and Freight (CIF) and FOB basis, paying IGST on the total value of imports, including .....

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..... SSIONS AND FINDINGS The High Court examined the provisions of the IGST Act and the Customs Act, considering the decisions of the Supreme Court in Mohit Minerals and the Bombay High Court in M/s. Agarwal Coal Corporation Pvt. Ltd [2024 (3) TMI 1265 - BOMBAY HIGH COURT]. The court observed that Section 5(1) of the IGST Act, read with Sections 12 and 14 of the Customs Act, mandates the levy of IGST on the value of imported goods, which includes the cost, freight, and insurance charges at the place of importation. Consequently, once IGST is paid on the value of goods, including freight charges, the nature of the transaction (CIF or FOB) becomes irrelevant for the purpose of IGST levy. Relying on the Supreme Court's decision in Mohit Mine .....

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..... utrality, ensuring that importers are not subjected to double taxation by paying IGST on freight charges twice - once as part of the value of imported goods and again separately on ocean freight charges. The court's reliance on the Supreme Court's decision in Mohit Minerals and the Bombay High Court's judgment in M/s. Agarwal Coal Corporation Pvt. Ltd. highlights the evolution of jurisprudence in this area. These decisions have established that the distinction between CIF and FOB contracts is irrelevant for the purpose of IGST levy on ocean freight charges, as long as IGST has been paid on the value of imported goods, including freight charges. The court's application of the principles established in these precedents under .....

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