Two petitions filed against IGST on ocean freight element

New Delhi: Two petitions have been filed in the Delhi and Mumbai high courts against a provision in the GST regime. The provision allows levying both the basic Customs duty and IGST on cost, insurance, and freight (CIF) value of goods brought into India, and also an IGST on ocean freight between two foreign parties for movement of these goods. While the Delhi High Court has admitted the petition of Narendra Plastic, a similar petition was filed by Victory Ventures in the Bombay High Court.

Suppose, some goods come from Washington to London first before being shipped further to Mumbai port. There is an element of ocean freight between parties in Washington and London. This cost could include steamship costs, broker commissions, duties and tariffs, vessel and port maintenance costs, labour costs, etc.

Now, the argument of the parties, that have gone to courts, is that, when the basic Customs duty and IGST is already paid on CIF value, why should there be another tax on ocean freight element, said Abhishek Rastogi of Khaitan & Co. He said this would give rise to double taxation, as the ocean freight element also includes CIF. Besides, how are Indian parties concerned with transaction between two oveseas parties, Rastogi asked.