The government is considering scrapping integrated goods and service tax (IGST) on ocean freight and a proposal is likely to be taken up by the GST Council next month. The move comes after the Supreme Court struck down the IGST on ocean freight. This is likely to bring relief to importers awaiting clarity and tax refunds post the judgement.
People familiar with the deliberations told The Economic Times, that the legal review post the the Mohit Mineral case verdict is over and a proposal to remove the tax would be taken to the council. “Both the law ministry and law committee of the GST Council is of the view that the IGST on ocean freight must be scrapped as per the Supreme Court verdict,” an official quoted above said.
The official added that this would be part of the GST Council's agenda for the upcoming meeting.
“The proposal is ready and it will be discussed at the next GST Council meeting as the decision to levy IGST was taken by the council,” another senior official confirmed.
The GST Council is the apex decision making body for the indirect tax. A draft circular will also be presented to the council and circulated once cleared. The council meeting is scheduled to take place in Madurai next month.
In May, a bench of justices DY Chandrachud, Surya Kant, and Vikram Nath dismissed the appeal by the central government against an earlier Gujarat High Court judgement that said that IGST on ocean freight is unconstitutional.
In its ruling, the SC bench also said that Union and state governments have simultaneous powers to legislate on GST and the council must work in a harmonious manner to achieve a workable solution.
Post that verdict, the Centre said it will take a legal opinion on the judgement.
The Gujarat High Court on July 29 directed the Central Board of Indirect Taxes and Customs to refund IGST paid on ocean freight within six weeks with interest. However, there is no formal directive to the officials in this regard.
Source: The Economic Times
https://economictimes.indiatimes.com/industry/banking/finance/igst-on-ocean-freight-likely-to-be-scrapped/articleshow/93716398.cms?from=mdr
https://economictimes.indiatimes.com/industry/banking/finance/igst-on-ocean-freight-likely-to-be-scrapped/articleshow/93716398.cms?from=mdr
