UNION OF INDIA V. MOHIT MINERALS PVT. LTD.: REDEFINING COOPERATIVE FEDERALISM UNDER THE GST REGIME

The dispute in Union of India v. Mohit Minerals Pvt. Ltd. arose at the crossroads of international trade practices and the developing legal framework of the Goods and Services Tax (GST). In maritime commerce, imports are typically governed by two standard Incoterms: Free on Board (FOB) and Cost, Insurance, and Freight (CIF). Under an FOB arrangement, the Indian importer is responsible for hiring the vessel and paying the freight directly to the shipping line, making them the main recipient of the transportation service. In contrast, in a CIF contract, the foreign exporter takes on the responsibility of arranging and paying for the freight and insurance, incorporating these costs into the overall price of the goods sold to the Indian buyer. Before the GST system, ocean freight was subject to Service Tax, and the government wanted to maintain this levy in the new indirect tax system. Through Notifications No. 8/2017 and 10/2017, the Centre imposed a 5% IGST on ocean freight using a Reverse Charge Mechanism for all importers. This resulted in a legal crisis. First, it required CIF importers to pay tax on services they did not contractually receive. Second, it led to double taxation since IGST was already paid on the freight component during customs valuation. This challenge went beyond tax calculations. It led the judiciary to outline the boundaries of executive power and the legislative authority under Article 246A. In the end, the case became an important investigation into whether the "One Nation, One Tax" idea could legally surpass the official definitions of "composite supplies" and the financial independence of States in India’s Cooperative Federalism.