Saraogi Udyog Pvt. Ltd. Vs Union Of India (Andhra Pradesh High Court)
The Andhra Pradesh High Court allowed the writ petitions challenging GST demands raised on ocean freight paid under Free on Board (F.O.B.) contracts in the course of coal imports. The petitioners, engaged in the business of importing and selling coal, had imported coal under both Cost, Insurance and Freight (C.I.F.) and F.O.B. contracts. Show-cause notices were issued for different periods alleging that GST was payable under the reverse charge mechanism (RCM) on ocean freight incurred in such imports. Subsequent assessment orders dropped the proposals relating to C.I.F. contracts but confirmed GST liability on freight paid under F.O.B. contracts.
The petitioners challenged these assessment orders on the ground that the levy was based on Notification No.08/2017 and Notification No.10/2017, which had already been quashed by the Gujarat High Court in Mohit Minerals Pvt. Ltd. and later affirmed by the Supreme Court. The petitioners contended that GST on ocean freight could not be levied either in C.I.F. or F.O.B. contracts as it would amount to double taxation of the same transaction.
The respondents argued that the Supreme Court judgment in Mohit Minerals was confined only to C.I.F. contracts and did not decide the taxability of freight under F.O.B. contracts.
The High Court noted that although the Supreme Court observations were made in the context of C.I.F. contracts, this Court had earlier held in W.P.No.1268 of 2021 and batch that the principle against double taxation would equally apply to both C.I.F. and F.O.B. contracts. The Court reiterated that taxing supply of services after the same cost had already suffered tax would amount to impermissible double taxation.
Relying on its earlier judgment, the High Court held that GST on ocean freight paid by the petitioners during import of coal under F.O.B. contracts was not leviable. Consequently, the Court set aside the assessment orders dated 21.02.2023 and 31.01.2023 to the extent they levied GST on freight paid during import transactions. The writ petitions were accordingly allowed without any order as to costs.
Counsel for the Petitioner: .C SANJEEVA RAO
FULL TEXT OF THE ANDHRA PRADESH HIGH COURT JUDGMENT
