HC Rules Ocean Freight on CIF Imports Not Taxable Again Under GST

Case Details: Midas Tankers (P.) Ltd. vs. Union of India - [2026] 186 taxmann.com 445 (Bombay)

Judiciary and Counsel Details

G. S. Kulkarni & Aarti Sathe, JJ.
Durgesh Nadkarni, Ashok Singh & D.B. Shroff, Sr. Adv. for the Petitioner.
Ms Shruti D. Vyas, Addl. Govt. Pleader & Aditya R. Deolekar, APP for the Respondent.

Facts of the Case

The petitioner, a GST-registered shipping line, provided vessel transportation services on a hire and freight basis under Cost, Insurance, and Freight (CIF) import contracts. The imports were undertaken on CIF terms, under which the foreign exporter arranged shipment to the Indian port, and the Indian buyer discharged customs duty, including the freight component embedded in the import value. The jurisdictional audit authorities raised an objection that the plac e of supply for transportation of goods was in India and accordingly proposed the levy of IGST under forward charge on the petitioner along with the disallowance of refund. A show cause notice (SCN) was issued, and subsequently an adjudication order confirmed the demand and also denied the refund claim. It contended that the freight element in CIF imports formed part of a composite supply of goods already subjected to customs duty and therefore could not be subjected to a separate GST levy. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that the levy of IGST under forward charge on the petitioner in respect of CIF import transactions was not sustainable in law. The Court interpreted that in CIF contracts, the freight and transportation component forms an integral part of a composite supply of goods between the foreign exporter and the Indian importer, and such import transactions are governed under Section 7 read with Section 5 of the IGST Act. It further held that the determination of place of supply under Section 13 of the IGST Act and the charging provisions under Section 8 of the CGST Act could not be applied in a manner that results in separate taxation of the freight component when customs duty, including freight, had already been discharged at the time of import. It was observed that such a dual levy would be contrary to the statutory scheme governing composite supply and import taxation. Accordingly, the SCN and adjudication order were quashed.