Case Reference:
M/s Tussor Machine Tools India Pvt. Ltd. v. Superintendent of Central Excise & CGST
Court: Madras High Court
Petition No.: W.P. No. 1004 of 2025 with W.M.P. Nos. 1246 & 1249 of 2025
Category: Reverse Charge Mechanism – Ocean Freight on CIF Imports
Date of Judgment: 20 January 2025
Relevant Sections: Section 5(3) of IGST Act, 2017; Section 9(3) of CGST Act, 2017
Facts (Paras 1–2):
M/s Tussor Machine Tools India Pvt. Ltd., Tirupur, filed a writ petition challenging the order-in-original dated 31.08.2023 issued by the Superintendent of Central Excise & CGST, Tirupur V Range. The order demanded IGST on ocean freight under the reverse charge mechanism for import transactions made on a CIF basis. The petitioner contended that such levy was unconstitutional as already decided in Union of India v. Mohit Minerals Pvt. Ltd., (2022) 92 GST 101 (SC). Both counsels for the petitioner and the Revenue agreed that the issue was squarely covered by this precedent.
Questions for Determination (Para 2):
Whether the petitioner, as an importer on a CIF basis, can be subjected to payment of IGST on ocean freight under reverse charge when the same is already included in the value of goods for customs valuation?
Court’s Observations (Paras 2–3):
The Court noted that the Supreme Court in Mohit Minerals Pvt. Ltd. (2022) 92 GST 101 (SC) had conclusively held that the reverse charge levy on ocean freight under Notification No. 10/2017-IGST (Rate) was ultra vires Section 5(3) of the IGST Act. The apex court clarified that importers cannot be treated as recipients of service separately, as the freight value is already a component of the customs valuation on which IGST is levied during import. The Madras High Court referred to its earlier Division Bench decision in W.P. No. 10330 of 2019 batch (dated 29.09.2022), which followed the same ratio.
Judgment (Para 3):
Justice Mohammed Shaffiq disposed of the writ petition, quashing the impugned order in light of the Mohit Minerals decision. The Court held that the issue is no longer res integra, and the demand under reverse charge on ocean freight cannot survive. No costs were imposed, and connected miscellaneous petitions were closed.
Summary of Cases Referred:
| Case Name | Court & Citation | Issue | Verdict |
|---|---|---|---|
| Union of India v. Mohit Minerals Pvt. Ltd. | Supreme Court (2022) 92 GST 101 (SC) | Validity of RCM levy on ocean freight under Notification No.10/2017-IGST (Rate) | Levy held ultra vires; importer not separate recipient of service |
| W.P. No.10330 of 2019 Batch | Madras High Court (29.09.2022) | Applicability of Mohit Minerals ruling to similar import cases | Followed Supreme Court ruling; petitions allowed |
Between Fine Lines:
The ruling reinforces that importers under CIF contracts are not liable to pay IGST again on ocean freight under reverse charge since the freight element is already taxed as part of the customs value. GST authorities cannot reopen or confirm such demands contrary to the Mohit Minerals ratio.
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