The Apex Court admitted the plea of the central government to challenge Gujarat High Court’s decision quashing Integrated Goods and Service Tax (IGST) on ocean freights under reverse charge mechanism.
The Gujarat High Court last year held that the Notification 8/2017 IGST(R) and Entry 10 of Notification 10/2017 IGST(R) levying IGST on ocean freight as ultra vires the IGST Act, and thereby unconstitutional for the lack of legislative competency.
The High Court, while considering a bunch of petitions, the High Court held that tax cannot be imposed on some supposed theory that the importer is directly or indirectly recipient of the service. The term ‘recipient’ has to be read in the sense in which it has been defined under the Act. There is no room for any interference or logic in the tax laws, the High Court said.
Before the High Court, the petitioners claimed that challenged the levy of the IGST on the estimated component of the Ocean Freight paid for the transportation of the goods by the foreign seller as sought to be levied and collected from the writ-applicants as the importer of the goods.
On departmental appeal against the High Court order, a three judge bench of Justice D.Y. Chandrachud, Indra Benerjee and Sanjiv Kurana issued a notice in this case and directed that the counter-affidavits shall be filed within a period of six weeks.
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