Bombay High Court Quashes SCN Demanding GST on Ocean Freight for goods Transportation Outside India


Bombay High Court Quashes SCN Demanding GST on Ocean Freight for goods Transportation Outside India


The bombay high court has quashed the show cause notice (SCN) demanding GST on ocean freight on transportation of goods from outside India.

On the Supreme Court decision in the case of Mohit Minerals and observed that the verdict applies to both free on board (FOB) and the sum of cost, insurance, and freight (CIF) contracts, the bench of Justice G. S. Kulkarni and Justice Firdosh P. Pooniwalla has laid on. The petitioner/assessee has challenged a show cause notice issued by the Assistant Commissioner of Sales Tax primarily on the ground that it has been issued without jurisdiction.

The petitioner’s contention is to the effect that what has been aimed to be invoked by the Designated Officer is Notification No. 8/2017-Integrated Tax (Rate) on June 28, 2017, in issuing the SCN, which itself has been struck down by the Division Bench of the Gujarat High Court in the case Mohit Minerals Pvt. Ltd. vs. Union of India. The High Court of Gujarat carried a decision in appeal before the Supreme Court in the matter of “Union of India vs. Mohit Minerals Pvt. Ltd.“, wherein a three-judge bench of the Supreme Court has kept the decision.

In Mohit Minerals, the petitioner’s case before the High Court of Gujarat was a case where the petitioner was importing coal from various countries on a FOB and CIF basis. The decision of the High Court of Gujarat has been upheld by the Supreme Court. The department argues that the Mohit Minerals-related decision is required to be applicable concerning the matters that comprise the contracts on a CIF basis rather than FOB contracts.

The court discovered the department’s argument was not perfect in as much as the matter in Mohit Minerals before the High Court of Gujarat was a case that consists of both categories of contract, CIF and FOB, which was reported in the judgment of the High Court of Gujarat.

The Court, on such facts, declared the revenue’s decision ultra vires of the IGST Act. Once the notification itself has been declared as ultra vires and the same has been upheld by the Supreme Court, in our opinion, following the mandate of the settled principle of law as laid down in M/s. Kusum Ingots & Alloys Ltd vs. Union of India and Anr., the notification is not available to the state authorities to be applied as it would amount to applying an illegal notification,” the court said while rendering the show cause notice without jurisdiction.


The copy of the order is as under:




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