Mohit Minerals Pvt Ltd v. Union of India

Facts

• Mohit Minerals imported goods on CIF (Cost, Insurance, Freight) basis
• Under CIF, the foreign seller bears ocean freight charges
• The government levied IGST on the ocean freight component under reverse charge mechanism (S.5(3) IGST Act read with notification)
• However, the assessable value for customs duty already included freight (CIF value)
• The importer challenged: (a) levy of IGST on ocean freight as double taxation; (b) the binding nature of GST Council recommendations

Issues

1. Whether IGST can be levied on ocean freight under reverse charge in CIF import contracts
2. Whether GST Council recommendations under Art.279A are binding on Parliament and State Legislatures

Held

• On ocean freight: Levy of IGST on ocean freight in CIF contracts amounts to double taxation since customs duty is already computed on CIF value (which includes freight). The notification was struck down.
• On GST Council: Art.279A does not vest the GST Council with power to make binding decisions. The Council's recommendations have persuasive value but are not binding on Parliament or State Legislatures. Both retain independent legislative power under Art.246A.

Ratio Decidendi

The GST Council is a constitutional body created for cooperative federalism, but its recommendations are not binding law. Parliament and State Legislatures have concurrent power under Art.246A to legislate on GST matters, and they are not obligated to implement every Council recommendation. On substantive tax, a levy that results in double taxation (same transaction taxed twice) is impermissible.