National Association of Container Freight Stations Vs Joint Commissioner of Customs (CH-IV) (Madras High Court)
Conclusion: Where the Commissioner of Customs issued a Public Notice directing Container Freight Stations (CFSs) not to collect GST on auction sales of uncleared cargo under Section 48 of the Customs Act, 1962, such notice was without jurisdiction, as the levy of GST was governed by the CGST Act and not by the Customs authorities. Once customs duty and IGST on import were paid, the subsequent auction constituted a distinct supply of goods under Section 7(1) of the CGST Act, taxable under Section 9(1). Hence, the Public Notice restraining CFSs from charging GST was invalid.
Held: Assessee-Container Freight Stations (CFSs) was governed by the Handling of Cargo in Customs Area Regulations, 2009, auctioned uncleared/unclaimed cargo under Section 48 of the Customs Act after issuance of due notice to the consignee. A Public Notice issued by the Commissioner of Customs (COC) directed that, while clearing unclaimed cargo, no GST should be collected from the highest bidder, since the bid value was considered cum-duty, inclusive of customs duty and IGST. Customs officers instructed CFSs accordingly, citing complaints that CFSs were demanding GST over and above the bid value. Assessee challenged the Public Notice and consequential directions as being beyond the jurisdiction of Customs authorities, contending that auction sales were taxable under GST laws and the notice interfered with statutory obligations under the CGST Act. Assessee contend that the Customs Department had no authority to decide on GST applicability; the levy of GST was governed solely by the CGST Act.; Auction sale by a CFS constituted a supply of goods to the successful bidder under Section 7(1) of the CGST Act and hence attracted GST under Section 9(1). Once the goods were sold, they lose their character as imported goods; the auction purchaser could not be treated as the importer. CFSs also render taxable services under Sections 45 and 141(2) of the Customs Act, for which GST must be collected and remitted. It was held that the Public Notice was without jurisdiction as the Customs Department had no authority to issue directions relating to GST collection, which fell exclusively within the purview of the CGST Act. Once a manual Bill of Entry was filed and customs duty/IGST under the Customs Tariff Act was discharged, the Customs Department’s jurisdiction ceases. The auction sale by CFS constituted a distinct transaction of supply of goods under Section 7(1) of the CGST Act, taxable under Section 9(1). The goods sold through auction no longer retain the character of imported goods; the successful bidder becomes the buyer in a domestic supply transaction. Para 3(viii) of Circular No.50/2005-Cus. itself allowed for recovery of local taxes like Sales Tax (now GST) in addition to duty, contradicting the Public Notice. Therefore, the impugned Public Notice dated 12.02.2021 and the consequential communication were quashed as ultra vires, being contrary to the CGST Act and beyond the powers under Sections 157–159 of the Customs Act.
