Image Source: Coal Import
The Hindu reported that the High Court of Gujarat has declared the imposition of integrated goods and services tax on ocean freight as ultra vires and held that such a levy is not permissible under the law. The landmark judgment has brought about major relief to the importing community as this tax was mired in controversies leading to its challenge before the high court. The court has junked two notifications levying the tax on the ground that they lacked legislative competence and held that no tax was leviable under the law. A bench headed by Justice JB Pardiwala ruled “We have reached the conclusion that no tax is leviable under the integrated goods and services tax Act 2017 on ocean freight for the services provided by a person located in a non-taxable territory by way of transportation of goods by a vessel from a place outside India up to customs station of clearance in India and the levy and collection of tax of such ocean freight under the impugned notification is not permissible in law.”
The petition, challenging the Centre’s notification, was moved by coal importers who submitted IGST can be levied either on the service provider or service recipient, not on the importers who pay customs duty. They also submitted that IGST on ocean freight amounted to double taxation and hence, unconstitutional.
