India – Supreme Court rules on IGST liability of ocean freight and legal force of GST Council recommendations

India’s Supreme Court has held in the case of Union of India Vs Mohit Minerals Pvt. Ltd that IGST should not be levied on ocean freight. An Indian importer is already liable to pay IGST on the CIF (Customs Insurance Freight) value of goods being imported. As part of the analysis of the decision, the Supreme Court also looked at the legal force of the recommendations made by the GST Council. It held that the recommendations of the GST Council are not binding on the Union and States and should only be persuasive. Article 246A of the Constitution provides Parliament and State Legislatures with equal and concurrent power to legislate on GST.

In addition, please see below a digest of other recent news and updates relating to India GST in the last few months.

CBIC send targeted emails to foreign online gaming, fintech and digital content providers

The Bangalore office of the Central Board of Indirect Taxes and Customs has emailed a number of overseas B2C digital services providers. The email sets out a reminder that there is a requirement for non-resident digital service providers with customers in India to register for GST. Businesses that provide digital services to Indian consumers should proactively register for GST to mitigate assessments and penalties.

GST Council seeking views of states on increasing GST rates on 143 items

It has been widely reported that the GST Council in India is seeking feedback from States on increasing the GST rates on 143 items as part of a proposed GST rate rationalisation. The GST Council has reportedly proposed to increase GST from 18% to 28% on 92% of the items.

Union Budget 2022

The Union Budget of India is the annual budget and presented each year on the first day of February. India’s Finance Minister, Nirmala Sitharaman delivered the Union Budget 2022 on February 1, 2022. There are a number of indirect tax (GST and customs duty) changes that businesses with a footprint in India should be aware of.

Mandatory e-invoicing with effect April 1, 2022

Compulsory e-invoicing in India has been extended to all Indian businesses with annual sales of  ₹20 crore (c.$3m) with effect April 1, 2022 (i.e. the start of the new Financial Year). The official order said the decision has been taken on the recommendations of the GST Council. It has been reported that 180,000 businesses needed to implement a compliant e-invoicing solution by April 1, 2022.

Contact our international indirect tax experts to discuss India GST compliance obligations and how Avalara can help.