IGST on Ocean Freight cannot be Levied on FOB Transactions also: Gujarat HC Draws on Mohit Mineral’s Precedent in Ruling

The Gujarat High Court ruled that Integrated Goods and Services Tax (IGST) on ocean freight cannot be levied on Free on Board (FOB) transactions, drawing on the precedent set in the Mohit Minerals case by the Supreme Court. The court held that since IGST had already been paid on the entire value of the imports, including freight, imposing an additional tax for FOB transactions was unjustified. The case involved a private limited company that challenged the levy of IGST on ocean freight for FOB imports. The court’s decision reinforces the principle that tax should not be levied on a component of a composite supply that has already been taxed. This ruling provides clarity on the tax treatment of ocean freight in FOB transactions and is expected to benefit importers by reducing unnecessary tax liabilities.