GST under reverse charge on ocean freight

[Kaustubh Karandikar]

In view of the Notification No. 11 and 13/2023 issued regarding GST on ocean freight, does it mean that even if contract is FOB and if the Shipping Line is from outside India, GST under reverse charge is not payable? And if payable, under which serial number of the reverse charge notification the same will be payable?

[Deepak Jose]

Taxable under RCM Serial Number No1

[Rajagopalan Ranganathan]

Sir,

The Supreme Court has admitted the appeal filed by UOI against the judgment of Gujarat High Court's judgment in Mohit Minerals Pvt. Ltd (2020 (1) TMI 974 - GUJARAT HIGH COURT). However, no stay had been granted against Gujarat High Cout's order. Therefore igst under reverse charge is not payable since the Gujarat High Court in its impugned order had held that Notification No. 8/2017-I.T. (Rate) and Entry 10 of Notification No. 10/2017-I.T. (Rate) both dated 28-6-2017 which make the importer of goods as the person liable to pay Integrated Tax on supply of services by a person located in non-taxable territory to a person who is also located in a non-taxable territory, by way of transportation of goods by a vessel from a place outside India upto the Customs Station of clearance in India, are ultra vires the provisions of Integrated Goods and Services Tax Act, 2017. The supply of service of transportation of goods by a person in a non-taxable territory to another person in a non-taxable territory from a place outside India upto the Customs Station of clearance in India is neither an inter-state supply nor an intra-state supply; thus, no IGST can be levied and collected from the importer.

[Shilpi Jain]

In case of FOB S. No. 1 of the IGST RCM notification will cover if service recipient is in India and provider outside India.

AI Summary

Reverse charge GST on ocean freight remains contested; applicability hinges on whether the service recipient is located in India. Whether GST under reverse charge applies to ocean freight is disputed: Serial No. 1 of the IGST reverse charge notification applies when the service recipient is in India and the provider is outside India; however, a Gujarat High Court held that notifications imposing IGST on importers for ocean freight from outside India are ultra vires because such supplies between non-taxable territories are neither inter-state nor intra-state, and the Supreme Court has admitted an appeal without stay, leaving the position unsettled.