M/s M. K. Agro Tech Pvt. Ltd. (GST AAR Karnataka)
Whether under Reverse Charge Mechanism, IGST should be paid by the importer on ocean freight on the case of CIF basis contract?
In the instant case, the importer in India is liable to pay the tax under RCM as they are deemed to be the recipient of service liable to tax under RCM and applicant has no dispute on the leviability of tax under these notifications.
It is pertinent to note that this is the tax liable to be paid on the supply of services related to transportation of goods and is not on the supply of goods.
The valuation of the supply of goods involved in the imports is inclusive of the value of transportation service. The consideration relating to transportation of goods in case of import of goods is a part of the value of goods as per rule 10(2) of the Customs Valuation (Determination of Value of Import of Goods) Rules, 2007. However, the taxable event is the import of goods into the territory of India and the valuation of the turnover of import of goods on which such tax shall be levied is as per the provisions of the Customs Act. Therefore it is clear from the above that this tax is on the import of goods and not on the services. Hence there is no double taxation involved in the above transactions as these are two distinct taxable transactions, one relating to supply of goods and other relating to supply of services.
