Ocean Freight IGST under RCM Not Payable for Pre-2023 Period: Calcutta HC Clarifies ‘Mohit Minerals Ruling’ applies Retrospectively [Read Order]

The Calcutta High Court held that IGST (Integrated Goods and Services Tax ) on ocean freight under the reverse charge mechanism ( RCM ) is not payable even for the period prior to 01.10.2023.

Justice Om Narayan Rai observed that “It is well-settled that a judgment of a Constitutional Court declaring a law applies retrospectively unless it is expressly made prospective, whereas a statute applies prospectively unless it is expressly made retrospective.”

In Sunrise Timply Company Pvt. Ltd., the petitioner challenged an Order-in-Original dated 30.01.2025 passed under Section 74 of the GST. The order imposed a tax liability of ₹18,61,047 on the petitioner for the period July 2017 to March 2018.

It was alleged that the petitioner had not paid the IGST on ocean freight for imported goods under RCM.

The petitioner also challenged the rejection of its rectification application dated 25.03.2025, which had submitted that the issue was already settled by the Supreme Court.

During the adjudication before the department, the petitioner submitted the Supreme Court’s final decision of the Mohit Minerals.

However, the Proper Officer proceeded to confirm the demand, stating that the Supreme Court judgment did not specifically state whether it would apply prospectively or retrospectively. Also, it depended on the fact that Entry 10 of Notification No.10/2017 was deleted only w.e.f. 01.10.2023, attempting to sustain levy for earlier periods.

The Calcutta High Court rejected the reasoning of the officer. It held that the Proper Officer’s view was fundamentally flawed.

The single bench observed that it is a settled principle that a judgment of a Constitutional Court declaring the law applies retrospectively unless expressly restricted, whereas statutory amendments operate prospectively unless made retrospective.

The Court further held that a notification cannot override the parent statute and must operate within the statute.

The bench, noting the Supreme Court’s findings in Mohit Minerals including that Notification 10/2017 was only clarificatory and the levy violated the concept of composite supply, the High Court decided that the demand for IGST on ocean freight under RCM for the petitioner’s import period cannot be sustained.

Accordingly, the High Court set aside the Order-in-Original dated 30.01.2025 as well as the rectification rejection order dated 25.03.2025. The matter was disposed of.

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