GST on Ocean Freight

[Kaustubh Karandikar]

XYZ imported goods by sea from Brazil. The invoice of Brazilian freight forwarder was in the name of Indian CHA and paid also by him. Subsequently, the Indian CHA issued a debit note on XYZ for recovery of these freight charges. The GST under reverse charge to be paid on the ocean freight paid to Brazilian freight forwarder is to be paid by XYZ or the Indian CHA?

[Shilpi Jain]

Without looking into the possible challenge to the RCM liability under GST on the freight charges, if we look at the RCM notification it states that the liabilty to pay tax is on the importer. In that case the person filing BoE would be liable i.e. XYZ.

[KASTURI SETHI]

CHA is only playing the role of facilitator. He is a pure agent. De facto, he is not buyer/importer. Expenses are to be borne by XYZ (importer) and not by CHA. Hence XYZ is liable to discharge tax liability on ocean freight.

[Ganeshan Kalyani]

As per notification the importer has to pay IGST under RCM. If the import term CIF then 10% of the same to be considered as ocean freight and pay GST @5% on the same. If FOB then freight is know to the importer. Gst%@5% on the freight is payable. And if the outward supply of the importer is taxable then the input tax credit of the IGST paid is eligible.

AI Summary

GST on Ocean Freight: XYZ Liable Under Reverse Charge; CHA Acts as Facilitator per RCM Notification XYZ imported goods from Brazil, with the freight invoice issued to and paid by an Indian Customs House Agent (CHA). The CHA then issued a debit note to XYZ for freight recovery. The question was whether XYZ or the CHA should pay GST under reverse charge on ocean freight. Responses clarified that, according to the reverse charge mechanism (RCM) notification, the liability to pay GST falls on the importer, XYZ, as the CHA acts merely as a facilitator. XYZ must pay GST on ocean freight and may be eligible for input tax credit if their outward supply is taxable.