TaxTMI 
TaxTMI 
2021 (1) TMI 1285
X X X X Extracts X X X X
X X X X Extracts X X X X
....erial required is Pock Phosphate which is imported from various countries like Egypt, Jordan & Morocco and also procured locally within country. The company is registered under the GST laws for payments of GST/IGST besides being paying the customs duty on import of Pock Phosphate. 2.2 Rock phosphate and other materials is imported only on CIF (sum of Cost, Insurance & Freight) basis. In CIF basis purchases, the freight invoice is issued by the foreign shipping line to the foreign exporter. The importer (i.e. Khaitan Chemicals & Fertilizers Ltd.) is concerned only with the purchase of goods and the suppliers of rock phosphate are responsible for transportation of goods upto the custom frontier of India. The company neither has any invoice of ocean freight nor has any idea of payments and the amount of ocean freight by the foreign exporter. 2.3 Reference to various acts for levying IGST on imported goods and determining the value for calculation of IGST: • Section 5(1) of the IGST Act, 2017 provides for circumstances when IGST would be applicable. It states IGST is charged on all interstate supplies (goods or services or both) except the supply of alcoholic liquor ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e India up to the customs station of clearance in India. 3.2 As per Corrigendum dated 30-06-2017 to the Notification No. 8/2017-Integrated Tax (Rate), where the value of taxable service 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 not available with the person liable for paying integrated tax, the same shall be deemed to be 10 % of the CIF value (sum of cost, insurance and freight) of imported goods. 3.3 As per Notification No. 10/2017-Integrated Tax (Rate), in case of services supplied by 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, the whole of integrated tax leviable under section 5 of the said Integrated Goods and Services Tax Act, shall be paid on reverse charge basis by the recipient of the such services. Importer, as defined in clause (26) of section 2 of the Customs Act, 1962 (52 of 1962), located in the taxable territory shall be considered as the recipient of services. 3.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....time of import with the value of imported coal. 3.8 Thus, the writ-applicants challenged the levy of the IGST on the estimated component of the Ocean Freight paid for the transportation of the goods by the foreign seller as sought to be levied and collected from the writ-applicants as the importer of the goods. Gujarat High Court in this matter pronounced the judgment that as per section 14 of Customs Act, assessable value of goods includes freight amount which represent the expenditure on transportation of goods. IGST is already paid on freight element by including it in assessable value. Therefore, payment of IGST separately on the ocean freight will amount to double taxation. Thus, IGST cannot be imposed on the same freight amount by treating it as a supply of service since freight also suffers IGST as a part of the assessable value of imported goods. This is necessary to avoid the vice of double taxation. 3.9 The company imports on CIF basis, and therefore is not concerned about the freight and does not know even about the charges for the same, which is the sole responsibility of the supplier of the rock phosphate outside India. Thus, the company deems the freight amount ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the same provisions under the CGST Act, 2017. Now we sequentially proceed to discuss the issues involved in the ruling so sought by the applicant and the law as applicable in the present case. 5.1 We find that the applicant is seeking advance ruling on the issues regarding liability to payment of IGST under Reverse Charge Mechanism (RCM) on deemed Ocean Freight on import of goods (raw material) on CIF basis on the ground that IGST has already been paid on total CIF value which includes the value of ocean freight. 5.2 Section 5 of the Integrated Goods and Services Tax Act, 2017 on LEVY AND COLLECTION OF TAX stipulates as under:- 5. Levy and collection.- (1) Subject to the provisions of sub-section (2), there shall be levied a tax called the integrated goods and services tax on all inter-State supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption, on the value determined under section 15 of the Central Goods and Services Tax Act and at such rates, not exceeding forty per cent., as may be notified by the Government on the recommendations of the Council and collected in such manner as may be prescribed and shall be paid by ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ted 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. Further as per Corrigendum dated 30.06.2017 to the Notification No. 8/2017-Integrated Tax (Rate), where the value of taxable service 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 not available with the person liable for paying integrated tax, the same shall be deemed to be 10 % of the CIF value (sum of cost, insurance and freight) of imported goods. 5.6 Notification No. 10/2017-Integrated Tax (Rate) dated 28.6.2017 specifies that in case of services supplied by 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, the whole of integrated tax leviable under section 5 of the said Integrated Goods and Services Tax Act, shall be paid on reverse charge basis by the recipient of the such services. Importer, as defined in clause (26) of section 2 of the C....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rge on services by way of transportation of goods by a vessel from a place outside India up to the Customs station of clearance in India, provided by a person located in non-taxable territory to a person located in non-taxable territory and in case actual value of service (actual value of freight) is not known to importer, the same shall be deemed to be 10% of the CIF value of imported goods. 5.9 Import of goods has been defined in the IGST Act, 2017 as bringing goods into India from a place outside India. All imports shall be deemed as inter-State supplies and accordingly Integrated tax shall be levied in addition to the applicable Custom duties. The IGST Act, 2017 provides that the integrated tax on goods imported into India shall be levied and collected in accordance with the provisions of the Customs Tariff Act, 1975 on the value as determined under the said Act at the point when duties of customs are levied on the said goods under the Customs Act, 1962. The integrated tax on goods shall be in addition to the applicable Basic Customs Duty (BCD) which is levied as per the Customs Tariff Act. In addition, GST compensation cess, may also be leviable on certain luxury and demeri....
X X X X Extracts X X X X
X X X X Extracts X X X X
....al or cross-border supply of services. In the case of transportation of goods, other than by way of mail or courier as is the case in hand, the place of destination of such goods will be the place of supply. 5.10 Under the GST regime, Article 269 A constitutionally mandates that the supply of goods, or of services, or both in the course of import into the territory of India shall be deemed to be supply of goods, or of services, or both in the course of inter-State trade or commerce for levy of integrated tax. So, import of goods or services will be treated as deemed inter-State supplies and would be subject to Integrated tax. Thus as discussed supra for importing of goods, there is no ambiguity as regards the applicable provisions i.e., it is a transaction of 'import of goods' and 'supply of goods', and accordingly the importer shall be liable to pay Basic Customs Duty along with integrated tax valued in accordance with Sec 12 of the Customs Act, 1962 (52 of 1962) read with of the Customs Tariff Act, 1975 (51 of 1975), on the value as determined under the said Act. While IGST on import of services would be leviable under the IGST Act on reverse charge basis, the levy of the IGST....