WorkIndex/GST On Ocean Freight Supreme Court Judgment
Case Study

GST On Ocean Freight Supreme Court Judgment
Landmark Court Judgment Analysis

GST On Ocean Freight Supreme Court Judgment needs detailed legal review and fact-matching before you rely on it. Compare top compliance and legal experts on the WorkIndex work index.

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Last fact-checked: 2026-07-01
Duplicate checked
Official-source cautious
India specific
Dispute Details

Facts & Lower Court History

  • Facts: Indian importers (like Mohit Minerals) imported goods on CIF (Cost, Insurance, and Freight) basis. The GST department demanded 5% IGST on ocean freight under reverse charge (RCM) via Notification 10/2017-ITR.
  • Lower Court History: The Gujarat High Court struck down the notifications as ultra vires. The Union of India appealed to the Supreme Court.
  • Key Issues: Whether an Indian importer can be liable to pay IGST on reverse charge basis for ocean freight services provided by a foreign shipping line to a foreign exporter in CIF contracts.
Court Ratio

Legal Principles & Ratio Decidendi

  • No Double Taxation: Importers pay GST on the transaction value of imported goods (CIF value), which already includes ocean freight. Levying GST on the service component separately leads to double taxation.
  • Composite Supply: Under Section 2(30) of the CGST Act, a CIF import is a composite supply of goods, and the tax rate of the principal supply (goods) applies to the entire bundle.
  • Advisory Recommendations: Recommendations of the GST Council are not binding on the Union and States; they have only persuasive value, and the Parliament and State Legislatures have co-equal powers to legislate.
Key Evidence

Agreements & Filings Evaluated

  • CBIC Notification 10/2017-IT(R): The notification prescribing RCM taxability on ocean freight.
  • Customs Valuation Rules: Rules showing that ocean freight charges are already included in the assessable value for customs and IGST calculation.
  • Supreme Court Judgment: The signed judgment in Union of India v. Mohit Minerals Pvt. Ltd. (Civil Appeal 1390 of 2022) dated May 19, 2022.
Action Points

Practical Mitigation & Compliance Steps

  • Stop RCM Payments: Importers operating under CIF contracts do not need to pay 5% IGST on ocean freight under reverse charge.
  • File Refund Claims: For RCM paid on ocean freight post-July 2017 under CIF contracts, file refund claims under the 'Excess Payment of Tax' category citing the Mohit Minerals judgment.
  • FOB Contracts Distinguish: Note that if the contract is on FOB (Free on Board) basis, the Indian importer is responsible for freight and must pay GST under forward charge or RCM as applicable.