The way for GST refund on imported products by sea is open: Experts



Taxpayers paying GST will be entitled to claim refund if they have not availed Input Tax Credit (ITC) while making payment of ‘carriage by sea’ on imported products. Experts say that after the Supreme Court’s decision in the Mohit Minerals case, taxpayers who have paid GST on sea freight have got the right to claim refund. The only condition is that the taxpayers have not already taken ITC. In this case, the Supreme Court has held that Indian importers are liable to pay ‘Integrated Goods and Services Tax’ (IGST) on ‘aggregate supplies’. Therefore, levying a separate duty on the Indian importer for supply of service would be in violation of the provisions of the Central GST (CGST) Act.

was challenged in the Gujarat High Court

In this case, the company had challenged the validity of CBIC’s notification regarding levy of Integrated GST on maritime freight in the Gujarat High Court. The Supreme Court has upheld the High Court’s decision in favor of the company. Vivek Jalan, Partner, Tax Connect Advisory Services said that this is a big relief for the importers and GST taxpayers. He said, “Actually, even the taxpayers who have already paid GST can now seek refund of the same.” Naresh Seth, partner at NA Shah Associates said, “Such a duty is basically between two foreign parties outside India. This was clearly outside the purview of the Government of India. Customs duty and GST are levied on the value of Rs. But CBIC also demanded imposition of 5 per cent GST on the value of imported goods considering 10 per cent of the value of imported goods as ocean freight. AMRG & Associates Senior Partner Rajat Mohan said it was double taxation of IGST as tax has already been paid as part of the value of the goods.

Importers can demand refund

Further these services are procured by the foreign exporter, thus the Indian importer will not be held liable to pay GST thereon. Mohan said, this decision has opened a window of opportunity for those importers who have already paid tax. Now they can demand refund of tax paid from the exchequer. Federation of Indian Exporters Organizations (FIEO) Director General Ajay Sahai said that his organization has already demanded that GST should not be levied on sea freight in imported products at CIF price.

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Shivam Bangwal

Shivam Bangwal is an Indian based entrepreneur who is a tech, travel and coding enthusiast with a post graduation degree on Master's of Computer Applications. He is a founder of Youthistaan, People News Chronicle, Hitchhike TV, Branding Panther and many more.
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