High Court declares tax on ocean freight in non-taxable territory under IGST Act unconstitutional.

The High Court, in a batch of writ applications, declared impugned notifications under the Integrated Goods and Services Tax Act, 2017 regarding taxation on ocean freight for services supplied by a person in a non-taxable territory as ultra vires the Act and unconstitutional. The Court held that no tax is leviable on ocean freight in a CIF contract, concluding that the levy and collection of tax on such ocean freight were impermissible. The judgment settled the issues raised, disposing of the petition and allowing ancillary reliefs to be sought from the concerned department.

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Issues: Challenge to impugned notifications under Integrated Goods and Services Tax Act, 2017 regarding taxation on ocean freight for services supplied by a person in a non-taxable territory.

Analysis:
1. The writ-application sought various reliefs challenging the impugned notifications related to taxation under the Integrated Goods and Services Tax Act, 2017. The petitioner requested the quashing of the notifications, declaring them lacking legislative competency and unconstitutional. Additionally, the petitioner sought a writ to stop tax levy on ocean freight for services provided by a person in a non-taxable territory. The petitioner also asked for records of recommendations and decisions related to the notifications, and a refund of the tax collected with interest.

2. The judgment delivered by the High Court on January 23, 2020, in a batch of writ applications, settled the issues raised in the present writ-application. The Court concluded that in a CIF contract, the importer is not the recipient of the service of transportation of goods, supporting the contention that no tax is leviable on ocean freight under the Integrated Goods and Services Tax Act, 2017. The Court held that the levy and collection of tax on such ocean freight under the impugned notifications were not permissible under the law. Consequently, the impugned notifications were declared ultra vires the Act and unconstitutional, thereby allowing the writ-application and connected petitions.

3. As a result of the judgment and the settlement of the issues, no further adjudication was deemed necessary in the present matter, and the petition was disposed of accordingly. The Court directed that the petitioner could seek ancillary reliefs by approaching the concerned department for appropriate orders. The decision provided clarity on the taxation of ocean freight services under the Integrated Goods and Services Tax Act, 2017, setting a precedent for similar cases in the future.

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