TAKE CREDIT OF IGST PAID ON OCEAN FREIGHT UNDER CIF BASIS

[BHAKTIKANT BHATT]

SIR,

WHETHER WE TAKE IGST CREDIT ON 5% IGST PAID ON OCEAN FREIGHT PAID ON CIF PURCHASE VIDE NOTIFICATION NO 10/2017.EXCISE AUDITOR DENY TO TAKE IGST CREDIT WHICH WE PAID ON OCEAN FREIGHT.

KINDLY GIVE US YOUR VALUABLE SUGGESTION.

Thanks

[Rajagopalan Ranganathan]

Sir,

First please clarify whether ocean freight is paid in respect of imported goods or exported goods.

Vide Sl. No. 9(ii) of Notification No. 8/2017-Integrated Tax (Rate) dated 28.6.2017 as amended, in respect of transport of goods in a vessel including services provided or agreed to be provided by a person located in non-taxable territory to a person located in non-taxable territory by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India is chargeable to IGST @ 5% subject to the condition that -credit of input tax charged on goods (other than on ships, vessels including bulk carriers and tankers) used in supplying the service has not been taken.

Explanation: This condition will not apply where the supplier of service is located in nontaxable territory.

If the supplier of of the service, that is the Shipping Company is located in non-taxable territory, that is in a place outside India then you have to pay the IGST @ 5% under reverse charge and you can take the credit. Please explain this position of law to your auditor and if he still persists with his objection you can seek departmental adjudication of the dispute.

 

AI Summary

Clarification on IGST Credit Eligibility for Ocean Freight under Notification Nos. 8/2017 and 10/2017; Reverse Charge Rules Apply. A user inquired about the eligibility to claim IGST credit on 5% IGST paid on ocean freight for CIF purchases, referencing Notification No. 10/2017. An auditor denied the credit claim. A respondent clarified that under Notification No. 8/2017, IGST is chargeable at 5% for transporting goods by vessel from outside India to an Indian customs station, with specific conditions on input tax credit. If the shipping company is in a non-taxable territory, IGST is payable under reverse charge, allowing credit. The user was advised to explain this to the auditor or seek departmental adjudication if necessary.