Midas Tankers Private Limited vs Union of India

GST update /2026-27/0040

GST UPDATE

Hon’ble Court: BOMBAY HIGH COURT

Case Title: GST Update on Midas Tankers Private Limited vs Union of India

Petition No. & Citation: WRIT PETITION NO.2554 OF 2026

Hon’ble Judge(s) G. S. KULKARNI & AARTI SATHE, JJ.

Date of Order 2 nd April 2026

Outcome In favour of the Petitioner

Brief Facts of the Case

The petitioner, Midas Tankers Private Limited, is engaged in the business of providing vessel transportation services on hire and freight basis. During the audit of the petitioner's records for FY 2021-22, objections were raised alleging that GST was payable on tax on outward supply of service (POS India) and in respect of ineligible refund claim made by the petitioner. The petitioner submitted a detailed reply to the audit objections and relied upon various judicial precedents. However, without properly considering the submissions, the department issued a Show Cause Notice proposing recovery of GST. The Petitioner also requested the department to keep the adjudication proceedings in respect of the impugned show cause notice be kept in abeyance in accordance with the pending writ petition filed by the Petitioner on validity of Section 13(9). Despite this, the impugned Order was passed to confirm the demand of tax, interest and penalty. Aggrieved by the Show Cause Notice and adjudication order, the petitioner approached the Bombay High Court under Article 226 of the Constitution.

Relevant Section

• Section 13(9) of the IGST Act.

• Section 2(30) read with Section 8 of the CGST Act

Question before Hon’ble Court

• Whether the ocean freight levied in a Cost, Insurance, and Freight (CIF) contract paid by a foreign seller to a foreign shipping company, if levied/ imposed on an Indian importer on the service aspect of the CIF contract, the same would be in violation of principle of composite supply, enshrined under Section 2(30) read with Section 8 of the CGST Act.

Brief Arguments by Petitioner

• Order passed in Violation of Natural Justice

The petitioner contended that detailed submissions were furnished during audit proceedings which adjudication were completely ignored by the authorities while passing the impugned notice and orders. The adjudicating authority also failed to consider the request for keeping the proceedings in abeyance despite the pendency of a writ petition involving identical legal issues. Accordingly, the order suffered from violation of principles of natural justice.

• Issue Squarely Covered by Mohit Minerals

The petitioner submitted that the controversy was no longer res integra and stood concluded by the decision of the Hon'ble Supreme Court in Union of India v. Mohit Minerals Pvt. Ltd. (2022) 10 SCC 700.

• Determination of Place of Supply

The petitioner submitted that during FY 2021-22, Section 13(9) of the IGST Act governed transportation of goods services where either supplier or recipient was located outside India. Under the said provision, place of supply was the destination of goods. However, Section 13(9) was omitted with effect from 01.10.2023 without any saving clause. Consequently, the petitioner argued that the amended legal position would apply and the place of supply would be determined under Section 13(2), namely the location of the recipient of service, who in the present case was situated outside India.

• Double Taxation Impermissible

The petitioner emphasized that customs duty and IGST had already been discharged on the CIF value of imported goods. Since freight already formed part of assessable value under the Customs Act, any separate levy of GST on the same freight component would amount to double taxation. Such taxation would be contrary to the scheme of GST and the concept of composite supply.

Brief Arguments by Respondent

• The Respondent argued that the provisions of the amended Section 13(9) of the Act would be applicable and the Petitioner would be liable for IGST under forward charge being place of supply i.e. India (the taxable territory). Hence the demand was rightly confirmed.

Cases Relied Upon

Case Law Citation

Union of India Vs. Mohit Minerals Pvt. Ltd (2022) 10 SCC 700

Findings and Judgement

• Freight Component Already Taxed Under CIF Imports.

The Court held that since the goods were imported on a CIF basis and customs duty had already been paid on the freight component, the same amount could not again be subjected to IGST in the hands of the petitioner.

• Transportation Service Forms Part of Composite Supply

The Court held that once customs duty and applicable taxes had been discharged on the CIF value, the liability to pay IGST could not be shifted to the petitioner. The transportation services rendered by the petitioner formed an inseparable part of the overall import transaction. Consequently, no separate tax liability could be imposed on the petitioner in respect of the same freight component.

• Reliance on Mohit Minerals

The Court observed that the issue was squarely covered by the Supreme Court's decision in Mohit Minerals, wherein it was held that freight and insurance in a CIF contract form part of a composite supply and cannot be taxed separately.

• Separate Levy Would Result in Double Taxation

Since IGST had already been paid on the composite value of imported goods, a further levy on the freight component would amount to double taxation and would be contrary to the GST framework.

• Wrong Invocation of Section 13(9) of the IGST Act

The Court observed that the Revenue had wrongly invoked Section 13(9) of the IGST Act for taxing the petitioner. The authorities failed to appreciate the true nature of the transaction and ignored the fact that the freight component had already been included in the taxable value of imported goods. Therefore, the demand raised by the department lacked legal foundation.

Accordingly, the High Court set aside the Show Cause Notice and adjudication order and directed the department to grant the consequential refund along with applicable interest.

CA PRADEEP JAIN

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