Bombay HC Quashed SCN Issued to Levy GST on Ocean Freight on FOB Contracts

Case Details: Agarwal Coal Corporation (P.) Ltd. v. Assistant Commissioner of State Tax - [2024] 161 taxmann.com 1 (Bombay)

Judiciary and Counsel Details

• • G.S. Kulkarni & Firdosh P. Pooniwalla, JJ.
  • J.K. Mittal & Aman Mishra for the Petitioner.
  • Ms S.D. Vyas, Addl. Govt. Pleader & Ms P.N. Diwan, AGP for the Respondent.

Facts of the Case

The petitioner was engaged in importing coal from various countries on FOB (Free on Board) and CIF (Cost, Insurance and Freight) basis. A show cause notice was issued by the department primarily relying on Notification No. 8/2017-Integrated Tax (Rate) dated 28-6-2017 levying IGST along with interest and penalty on the ocean trade service on FOB contracts.

It filed writ petition to challenge the show cause notice on the ground that the said notification was struck down by Division Bench of Gujarat High Court in case of Mohit Minerals (P.) Ltd. v. Union of India [2020] 113 taxmann.com 436. The department contended that the said decision needed to be applied only in respect of cases involving contracts on CIF basis and not on FOB contracts.

High Court Held

The Honorable High Court noted that the case of Mohit Minerals (P.) Ltd. involved both categories of contract namely CIF and FOB and the said notification itself had been declared ultra vires and the same was also upheld by Supreme Court. Therefore, following the mandate of the settled principle of law, the notification was no manner available to the State Authorities to be applied as it would amount to applying an illegal notification. Thus, the Court held that the impugned notice was to be quashed and striking down of the notification would be applicable on FOB contracts.

List of Cases Reviewed

• • Mohit Minerals (P.) Ltd. v. Union of India [2020] 113 taxmann.com 436/78 GST 519/2020 (33) G.S.T.L. 321 (Guj.) (para 7) followed.

List of Cases Referred to

• • Mohit Minerals (P.) Ltd. v. Union of India [2020] 113 taxmann.com 436/78 GST 519/2020 (33) G.S.T.L. 321 (Gujarat) (para 2)
  • Union of India v. Mohit Minerals (P.) Ltd. [2022] 138 taxmann.com 331/92 GST 101/2022 (61) G.S.T.L. 257 (SC) (para 3)
  • Agarwal Coal Corporation (P.) Ltd. v. Union of Indian [Writ Petition (C) No. 8720 of 2017, dated 24-8-2022] (para 4)
  • Agarwal Fuel Corporation (P.) Ltd. v. Union of India [Writ Petition No. 19382 of 2017, dated 30-1-2023] (para 5)
  • Liberty Oil Mills Ltd. v. Union of India [2023] 148 taxmann.com 85/97 GST 285/2023 (72) G.S.T.L. 305/(2023) 4 Centax 65 (Bombay) (para 6)
  • Kusum Ingots & Alloys Ltd. v. Union Of India AIR 2004 S.C. 2321 (para 8).