Challenge to Tax on Ocean Freight for Non-Cooking Coal Imports

The challenge to the vires of Notification No. 8/2017-Integrated Tax [Rate] and Entry 10 of Notification No. 10/2017-Integrated Tax [Rate] regarding the payment of tax on ocean freight for non-cooking coal imports under the Integrated Goods & Service Tax Act, 2017 was brought by an importer. The petitioner contested the requirement to pay tax on ocean freight under the impugned notifications after already paying tax on the entire import value including the freight under the IGST Act. The court issued notice and set the matter for return on 9th March 2018, allowing for direct service.

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Issues:
Challenge to the vires of Notification No. 8/2017-Integrated Tax [Rate] and Entry 10 of Notification No. 10/2017-Integrated Tax [Rate] regarding payment of tax on ocean freight for non-cooking coal imports under the Integrated Goods & Service Tax Act, 2017.

Analysis:
The petitioner, an importer of non-cooking coal, contests the requirement to pay tax on ocean freight under the impugned notifications despite already paying tax on the entire import value including the freight under the IGST Act. The challenge is based on three main elements: first, the petitioner argues against being taxed again on the ocean freight under a different notification after already paying tax under the IGST Act; second, for CIF contracts where both service provider and recipient are outside India, the petitioner asserts that no tax should be levied, even under reverse charge mechanism; third, in High Sea sales, where the burden is on the importer petitioner despite not being the service recipient, as the services were received by the seller of goods on high sea basis from the exporter/transporter.

The counsel for the petitioner contends that the impugned notifications are ultra vires the Act and represent an excessive delegation of powers for subordinate legislation. The court has issued notice and set the matter for return on 9th March 2018, allowing for direct service.

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