Facts of the Case

The petitioner, Chambal Fertilisers and Chemicals Limited, had challenged, among other things, an Advance Ruling (No. RAJ/AAR/2018-19/14) of the Rajasthan Authority for Advance Ruling and the levy of IGST on ocean freight under the reverse charge mechanism pursuant to Notification dated 28.06.2017 and the proviso to Section 5(1) of the Integrated Goods and Services Tax Act, 2017, contending this resulted in double taxation on the CIF value of imported goods (which already included freight). At the hearing, the petitioner did not press its challenge to the constitutionality of the Authority for Advance Ruling's composition, but pressed for quashing of the impugned Advance Ruling and refund of the IGST paid, relying on the Supreme Court's decision in Union of India v. Mohit Minerals (Pvt.) Limited, (2022) 10 SCC 700, which had struck down the levy of IGST on ocean freight as a separate "supply of service" component when IGST had already been paid on the composite value of the imported goods. The submissions on this point were not disputed by the Additional Solicitor General appearing for the respondents.

Issues Involved

  1. Whether the levy of IGST on ocean freight under reverse charge, in addition to IGST already paid on the CIF value of imported goods, could be sustained in light of the Supreme Court's ruling in Mohit Minerals.
  2. Whether the petitioner was entitled to a refund of the IGST paid on ocean freight.

Petitioner's Arguments

  • The issue stood squarely covered by the Supreme Court's decision in Mohit Minerals, which held that a separate levy on the "service" component of a composite supply, already taxed as part of the value of imported goods, was illegal and impermissible.
  • The petitioner was entitled to quashing of the impugned Advance Ruling and refund of the IGST paid on ocean freight.

Respondent's Arguments

  • The submissions made on behalf of the petitioner, based on Mohit Minerals, were not disputed by the learned Additional Solicitor General appearing for the respondents.

Court Order/Findings

  • The Court, noting the respondents did not dispute that the issue was covered by Mohit Minerals, disposed of the writ petition in light of that judgment, holding that IGST could not be separately levied on the ocean-freight/service component where IGST had already been paid on the composite value of the imported goods.
  • The Court directed that the petitioner would be entitled to refund of the IGST paid by it, to be effected by the respondents within six weeks from the date of the order.

Important Clarification

  • Following Union of India v. Mohit Minerals, IGST cannot be separately levied under reverse charge on the ocean-freight component of a CIF import where IGST has already been discharged on the composite value of the imported goods; such double levy is impermissible as it violates the "composite supply" principle under Section 8 of the CGST Act.
  • Importers who have paid such IGST on ocean freight are entitled to refund, without needing to independently relitigate issues already settled by the Supreme Court.

Sections Involved

  • Section 5, IGST Act, 2017 – levy and reverse charge mechanism for integrated tax.
  • Section 2(11) & 13(9), IGST Act, 2017 – definitions relevant to import of goods/inter-state supply.
  • Section 8, CGST Act, 2017 – tax liability on composite and mixed supplies.
  • Section 2(30), CGST Act, 2017 – definition of composite supply.
  • Section 96, CGST Act, 2017 / Rajasthan GST Act, 2017 – constitution of the Authority for Advance Ruling.

Decision – In Favour of

The decision clearly favours the assessee – the writ petition was allowed to the extent of directing a refund of the IGST paid on ocean freight, in line with the Supreme Court's binding precedent.

Related Case Laws

No directly on-point case notes are currently published on this site.

Case Details

  • Court: High Court of Judicature for Rajasthan, Bench at Jaipur
  • Case No.: D.B. Civil Writ Petition No. 7091/2019
  • CNR: Not available
  • Coram: Hon'ble Mr. Justice Arun Bhansali and Hon'ble Mr. Justice Narendra Singh Dhaddha
  • Decision Date: 21.12.2023
  • Disposal Nature: Disposed of (refund of IGST directed, following Supreme Court's Mohit Minerals judgment)

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