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TMI Blog2019 (10) TMI 945X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,000/- each under the CGST Act and the KGST Act. 2. The Applicant is a Private Limited Company and is registered under the Goods and Services Act, 2017. The applicant has sought advance ruling in respect of the following question: Whether under Reverse Charge Mechanism, IGST should be paid by the importer on ocean freight on the case of CIF basis contract? 3. The applicant furnishes some facts relevant to the stated activity: a. The applicant states that they are into the business of supplying edible oil and they import edible grade Crude Oil without any separate charges for transportation from other countries to Indian port on CIF basis. When it enters the Indian Port, Basic Customs Duly and applicable Cess along with IGST is paid. b. Section 15 of the Customs Valuation Rules provides for the value to be considered for imposing the Basic Customs Duty. The applicable rule reads as under: As per Rule 10(2) Customs Valuation (Determination of Value of Import Goods) Rules. 2007, The value of the imported goods shall be the value of such goods, for delivery at the time and place of importation and shall include- (a) The cost of transport of the impo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmined under sub-section (8) or sub-section (8A), as the case may be. 3(8) For the purposes of calculating the integrated tax under sub section (7) on any imported article where such lax is leviable at any percentage of its value, the value of the imported article shall, notwithstanding anything contained in section 14 of the Customs Act, 1962, be the aggregate of (a) the value of the imported article determined under subsection (1) of section 14 of the Customs Act, 1962 or the tariff value of such article fixed under sub-section (2) of that section, as the case may be; and (b) any duly of customs chargeable on that article under section 12 of the Customs Act, 1962, and. any sum chargeable on that article under any law for the time being in force as an addition to, and in the same manner as, a duty of customs, but does not include the tax referred to in sub-section (7) or the cess referred to in sub-section. g. From the combined reading of the above provisions, it can be deduced that IGST is to be charged on the value of import of goods. Also, it is provided that the value of the goods for the purpose of levying integrated tax shall be assessable value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e point no. 10 of the notification, the recipient of supply is referred to as the importer and he shall be subject to reverse charge mechanism. The coverage of the term recipient of supply is provided in section 2(93) of the CGST Act, 2017 and the same is provided as under: (93) recipient of supply of goods or services or both, means - (a) where a consideration is payable for the supply of goods or services or both, the person who is liable to pay that consideration; (b) where no consideration is payable for the supply of goods, the person to whom the goods are delivered or made available, or to whom possession or use of the goods is given or made available; and (c) where no consideration is payable for the supply of a service, the person to whom the service is rendered, and any reference to a person to whom a supply is made shall be construed as a reference to the recipient of the supply and shall include an agent acting as such on behalf of the recipient in relation to the goods or services or both supplied. l. As can be seen from the above, it is an inclusive definition and there is no provision provided anywhere in the Act to expand its cove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply. p. The import of goods on CIF basis includes import of goods along with services such as insurance and freight which are naturally bundled together in the ordinary course of business, therefore falls within the definition of composite supply . The principal supply is defined under section 2(90) of the CGST Act, 2017 as under: section 2(90) - principal supply means the supply of goods or services which constitutes the predominant element of a composite supply and to which any other supply forming part of that composite supply is ancillary. Inferring from the above definitions, the principal supply in the appellant s scenario shall be the import of goods which forms a predominant element of the composite supply and insurance, freight being ancillary services provided. Further section 8 of the CGST Act provides for the computation of tax liability on composite supply. The section reads as under: Section 8. Tax liability on composite and mixed supplies. - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 We have considered the submissions made by the Applicant in their application for advance ruling as well as the submissions made by Sri. Dayananda K. C.A. and authorised representative of the applicant during the personal hearing. We have also considered the issues involved, on which advance ruling is sought by the applicant, and relevant facts. 5.2 At the outset, we would like to state that the provisions of both the CGST Act and the KGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the KGST Act. 5.3 The issues involved are examined. The Entry No. 9(ii) of Notification No. 8/2017- Integrated Tax (Rate) dated 28.06.2017 reads as under: SI. No. Chapter, Section or Heading Description of Service Rate (per cent.) Condition 9 Heading 9965 (Goods Transport Services) (ii) Transport of goods in a vessel including services provided or agreed to be provided by a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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