1. Whether under Reverse Charge Mechanism IGST should be paid by the Importer on Air & Ocean freight in case of CIF basis contract when service provider and service recipient both are outside the territory of India.
2. If no ok.If yes can Importer take credit of IGST.
08 June 2018
Plain reading of the Notification infers that GST has to be paid by the importer on ocean freight even in case of CIF basis import of goods (freight charges are incurred by foreign supplier). However, the notification cannot deem the importer as recipient of service when the law does not say so. Therefore, my view is that there is no IGST payable on ocean freight by the importer in case of CIF basis contract. Mohith minerals case pending before Ho'ble HC on the same facts.
Nevertheless, in one of the recent Advance rulings, the authority held that GST is payable under RCM by the importer even in case of CIF basis contracts. The amount of IGST can be claimed as input tax credit by the importer.
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