Bombay HC affirmed that Apex Court’s ruling on both ‘ocean freight’ applies to both CIF and FOB contracts.

by Vikash Agarwal

Hon’ble Bombay HC affirmed that the Apex Court’s ruling on ‘ocean freight’ applies to both CIF and FOB contracts. Lets see if the litigation rests or if there be another round of litigation before the Hon’ble SC?

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Posted 2 years ago, by author.

SC ruling on ocean freight applicable to FOB?

It is to note that the SC ruling has validated a few facts which are common for both CIF & FOB imports.

• importer’ can be classified as the taxable person who is liable to pay tax under RCM.
• import of ocean freight services is an inter-state supply where importer is the ‘recipient’
• deeming fiction made the importer of goods also a recipient of service.

Despite of the above commonality, there are views that the ruling is inapplicable to FOB imports, reasons being;

• the service of ocean freight is availed by the importer directly from the foreign service provider (FSP)
• FSP has no privy with the foreign supplier of goods (FSG) whose scope is supply of goods only without any transport oblingation.

• consideration for ocean freight separately negotiated.
• composite supply not applicable in this case as both the supplies are independent?