Union of India & Anr. vs. M/s Mohit Minerals Pvt. Ltd.
Background
Indian importers like Mohit Minerals buy goods such as coal from abroad on a "Cost-Insurance-Freight" (CIF) basis, meaning the foreign seller arranges and pays for the shipping. The Indian government issued notifications requiring the Indian importer to additionally pay IGST (integrated GST) on the ocean-freight component of that shipping, under a "reverse charge" mechanism, even though the freight cost was already included in the value on which the importer paid customs duty. Importers challenged this as unconstitutional double taxation and as going beyond what Parliament's GST laws actually authorised. The Gujarat High Court struck down the notifications, and the Union of India appealed to the Supreme Court.
Decision Breakdown
The Supreme Court dismissed the government's appeals, upholding the High Court's conclusion that the notifications taxing Indian importers separately for ocean freight on CIF imports were illegal. It held that once IGST is charged on the "composite supply" of imported goods (which already factors in freight, insurance, etc.), a second, separate tax on the freight/service component of the same transaction violates the CGST Act's composite-supply principle and amounts to impermissible double taxation. Importantly, in reaching this result the Court also made a landmark constitutional ruling on GST Council recommendations: it held that recommendations of the GST Council (the body of Union and State finance ministers that decides GST rates and rules) are not legally binding on either Parliament or the State legislatures. They only carry persuasive value, because India's GST framework under Article 246A gives the Union and States simultaneous, non-hierarchical power to legislate on GST, reflecting "cooperative federalism" rather than a top-down command structure. The government's rule-making (delegated legislation) is, however, bound by the Council's recommendations.
Lesson Learnt
The Union and State governments cannot use the GST Council's advice as an excuse to impose whatever tax structure they like, nor is the Council's word final law by itself: actual legislative power remains with Parliament and the State legislatures; and taxpayers cannot be taxed twice, once through customs duty and again separately through IGST, for the same value already embedded in an import transaction.