Applicant must pay IGST on ocean freight under Reverse Charge Mechanism despite CIF value

The Authority ruled that the applicant must pay IGST on ocean freight under Reverse Charge Mechanism, as per Notifications 10/2017-IT(R) and 8/2017-IT(R), despite inclusion in CIF value.

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Issues:
Applicability of Reverse Charge Mechanism on Ocean Freight when IGST is paid by the importer on Goods Imported on CIF Basis.

Analysis:
1. Background: The applicant, engaged in trading edible oils, sought an advance ruling on whether they are required to pay IGST on ocean freight under Reverse Charge Mechanism (RCM) on deemed amount, leading to potential double taxation.

2. Legal Provisions: The application falls under Section 97(2)(e) of the CGST Act 2017, concerning the liability to pay tax on goods or services. The applicant fulfilled all requirements for filing the application.

3. Applicant's Position: The applicant imports crude soyabean oil on CIF basis, including ocean freight. They argued against double taxation, citing Notification No. 10/2017-IT(R) requiring IGST payment on ocean freight under RCM.

4. Concerned Officer's View: The officer supported IGST payment on ocean freight under RCM, as per Notifications 10/2017-IT(R) and 8/2017-IT(R), disregarding inclusion in CIF value.

5. Discussion: The Authority found no ambiguity in existing law mandating IGST payment on ocean freight under RCM, regardless of inclusion in CIF value. The applicant challenged the levy's jurisdiction, but the Authority clarified its role and upheld the IGST payment requirement.

6. Ruling: The Authority ruled that the applicant must pay IGST on ocean freight under RCM, as per Notifications 10/2017-IT(R) and 8/2017-IT(R), despite inclusion in CIF value. The ruling is valid unless declared void under the GST Act.

This detailed analysis covers the legal judgment's background, arguments presented, legal provisions, and the final ruling on the issue of Reverse Charge Mechanism on Ocean Freight under the GST Act.

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