SEEKING CLARIFICATION PERTAINING TO GST RCM ON OCEAN FREIGHT

[Vishnu Shakya]

Dear Sir/mam

we do import, In FOB contract we ask our CHA to book container, He than book container and issue us Tax invoice from his own firm charging ocean freight with 5% along with other charges.

however in bill of lading freight forwarder name is different not our cha firm, but in BL freight forwarder location is in India.

my query is:  as importer, is RCM applicable on ocean freight, provided freight forwarder location is in India who book the space from shipping line company and than sell to us, also provided we already paid twice IGST on ocean freight one at custom and second when our cha issue us tax invoice charging 5% GST on ocean freight.

[Raam Srinivasan Swaminathan Kalpathi]

Dear Querist

Kindly refer - re Mohit Minerals Ltd (SC) wherein the Notification of the department mandating remittance of freight on RCM was struck down.  This has been accepted by the GST department also and all importers who had previously remitted GST on RCM basis have been applying for refund and these have also been sanctioned i.e. those TPs who are unable to utilise the ITC). 

[Sadanand Bulbule]

This is well settled matter as replied by  Sri. Raam Sir.

[Ganeshan Kalyani]

RCM is not applicable in FOB as the cost of freight is not included in it. CIF is where the freight is included and IGST was payable on freight (ocean). But that was struck down by Honble Supreme Court as IGST is paid with Customs Duty on import value. 

AI Summary

Reverse charge on ocean freight found inapplicable in FOB imports; prior mandated remittance struck down and refunds available. RCM is not applicable to ocean freight on FOB imports because freight is not included in the FOB import value; CIF is the arrangement where freight forms part of import value. The departmental notification mandating RCM on freight was invalidated, the tax administration has accepted that position, and importers who remitted GST under RCM have been applying for and receiving refunds where ITC could not be utilized.