Kerala High Court Stays Show-Cause Notice For IGST Demand On Ocean Freight

Justice AM Badar additionally issued notice to the Joint Director, Directorate General of GST and the Joint Commissioner of Central Tax and Central Excise as well.

In the petition filed by M/s KVN Impex Pvt Ltd, filed through Advocates P Abdul Azees, Akhil Suresh and T. Archana, the petitioner challenges a 2017 Notification imposing upon an importer of goods, the liability of paying the Integrated GST (IGST) for the transportation of goods by ship. Specifically, the petitioners challenge the legality of the show cause notices served upon them under the said Notification.

Asserting that the Notification is ultra vires the IGST Act as well as the Central GST Act, the petitioner claims ::

"Since tax has been fixed by Notification No. 10/2017 integrated Tax (Rate) dated June 28, 2017 on the importer of goods who is not a recipient of services is ultra vires and against the provisions of the Integrated Goods and Service Tax Act 2017 and Central Goods and Service Tax Act 2017".

The petitioner, an importer of certain polymers, in particular challenges the imposition of IGST pertaining to the 'transport of goods' upon them. Stating that they are not the recipient nor the provider of the service of the 'transport of goods' but only the 'recipient of goods', the petitioners assail the Notification.

It is pointed out,

"The Petitioner is neither the provider nor recipient of the service but the Importer of goods, who is not a party with regard to service of transportation of goods or ocean freight. His contract is with the supplier of goods on CIF/C basis as per which the goods have to be delivered at the port of destination from where he is taking delivery after paying Integrated Goods and Service Tax on the goods imported".

On this count, it is added, that the petitioner does not part with consideration on account of the transportation of goods, nor imports the service. Their liability lies only in taking delivery of the goods and paying the CIF/CF other tax applicable on the goods, it is stated in essence.

Therefore, the petitioner avers that the showcause notice issued in accordance with the notification is illegal and without jurisdiction.