We are delighted to share that our in-depth legal and tax analysis of the Supreme Court’s landmark judgment in the Mohit Minerals case and its implications on the refund of IGST under the Reverse Charge Mechanism (RCM) on ocean freight has been featured in the NIRC Newsletter (June 2022 edition).
This ruling marks a pivotal moment in India’s indirect tax landscape, bringing much-needed clarity to the applicability of Integrated Goods and Services Tax (IGST) on ocean freight. The Supreme Court held that no separate IGST is payable under RCM on ocean freight when the importer has already discharged IGST on the total CIF (Cost, Insurance, and Freight) value of imported goods.
Significance of the Judgment
The verdict in Union of India vs. Mohit Minerals Pvt. Ltd. has far-reaching implications for businesses engaged in imports, particularly in the following areas:
✅ Legal and Constitutional Aspects – The Supreme Court ruled that the levy of IGST on ocean freight under RCM creates double taxation, as IGST is already paid on the CIF value of imports. This interpretation aligns with the principle of no taxation without authority of law.
✅ Financial Relief for Importers – With this ruling, importers who had paid IGST on ocean freight under RCM may now explore avenues for claiming refunds of the wrongly paid tax, potentially leading to significant financial benefits.
✅ GST Compliance & Tax Structure Implications – The decision reaffirms the need for cohesive tax policies that align with the framework of GST as a destination-based tax, ensuring businesses are not subjected to redundant tax burdens.
✅ Impact on Past and Future Transactions – The judgment provides clarity on historical tax liabilities and will play a crucial role in structuring future import transactions, helping businesses optimize their tax strategies and ensure compliance with GST provisions.
Navigating IGST Refunds: Key Considerations
With this judgment opening up possibilities for refunds of IGST paid on ocean freight, businesses must carefully evaluate their eligibility and approach. Our article delves into:
🔹 The legal basis for claiming refunds
🔹 The documentation and procedural requirements
🔹 Challenges and potential roadblocks in the refund process
🔹 Practical steps to ensure a smooth claim process
Conclusion
The Supreme Court’s ruling in the Mohit Minerals case has established a crucial legal precedent that will shape India’s GST framework for international trade. It provides a much-needed respite for importers and reinforces the fundamental principles of GST.
To gain deeper insights into this judgment, its impact on importers, and the refund process, we invite you to read our detailed article published in the NIRC Newsletter (June 2022 edition).
For further professional assistance regarding GST compliance, litigation strategies, and refund claims, feel free to contact our expert team.
