Service Tax on Ocean Freight Imports under CIF contracts for Silvassa unit in 2017 – transportation cost upto customs station in India incurred by foreign supplier
The petitioner – company is one of the top manufacturers of yarn at Silvassa. The company imports various raw material for manufacture of the final product, spare parts and accessories for its plant and machinery from foreign suppliers under CIF (Cost, Insurance and Freight) Contract.
The transportation cost upto the customs station in India is incurred by the foreign supplier.
The respondent no.3 conducted audit and demanded payment of service tax at Rs.26,04,895/- for the period from April to June 2017 on the value of the imports.
HELD that IGST on transportation of goods in a vessel from a place outside India upto the custom station of clearance in India on the importer, on reverse charge basis is arbitrary and illegal. Levy of service tax on the importer who is neither service provider nor service receiver sought to be made in terms of powers of Section 5(3) of the IGST Act. Following the earlier decisions including SAL Steel case of the Gujarat High Court, it was held that the impugned notifications are illegal and the petitioner is entitled to refund of service tax.
Judgment dated 4.3.2024 in W.P.No.184 of 2019 of M/s. Sanathan Textile Pvt Ltd Vs. Union of India and others
