Greenstar Fertilizers Limited Vs Union of India (Madras High Court)
Conclusion: Entry 9 of Notification No. 8/2017-Integrated Tax (Rate) and Entry 10 of Notification No. 10/2017-Integrated Tax (Rate), both dated 28 June 2017, which had imposed Integrated GST (IGST) on ocean freight under reverse charge was quashed as levy on ocean freight amounted to double taxation, since the importer had already paid IGST on the composite supply of goods, which included the cost of freight and insurance
Held: The issue that arose for consideration in these Writ Petitions pertained to the validity of declaration under Entry 9 of the Notification No.8/2017-Integrated Tax (Rate) dated 28.06.2017 and Entry 10 of the Notification No.10/2017-Integrated Tax (Rate) dated 28.06.2017, which were challenged as being ultra vires of the Constitution as well as the provisions of the Integrated Goods and Service Tax Act, 2017. It was held that following the decision in case of Union of India Vs. Mohit Minerals Private Limited, dated 19.05.2022 [2022 (61) G.S.T.L. 257 SC], it was concluded that levy on ocean freight amounted to double taxation, since the importer had already paid IGST on the composite supply of goods, which included the cost of freight and insurance. The Bench observed the Mohit Minerals ruling that once the importer paid IGST on the CIF value of goods, a separate levy on the freight component would violate Section 8 of the CGST Act, which governed taxation of composite supplies. Under the composite supply principle, the supply of goods and services naturally bundled together such as transportation and insurance forming part of a CIF contract must be taxed as a single supply of goods. The impugned entries in the notifications, by taxing the freight component separately, were held to contradict the scheme of the GST legislation and exceed the powers conferred under the IGST Act.
