Last reviewed: 25 September 2026. Importers who bring in goods on a CIF (Cost, Insurance, Freight) basis have, for years, effectively paid IGST twice on the ocean-freight component of their imports — once embedded in the customs-value-based IGST at the port, and again separately under reverse charge on the notional value of the ocean-freight service itself. The Supreme Court struck down that reverse-charge levy in Union of India v. Mohit Minerals Pvt. Ltd., (2022) 10 SCC 700, decided 19 May 2022, and the notification entries were finally omitted with effect from 1 October 2023 — so the exposure period runs the full length from 1 July 2017 to 30 September 2023, not merely to 2022. Importers who paid and have not claimed remain entitled in principle to recover. Two questions decide how much actually comes back, and the answer to the second has hardened considerably against importers: the Supreme Court held in Union of India v. Torrent Power Ltd. (SLP (C) No. 13084/2025) on 10 February 2026 that where the incidence of the tax was passed on, the refund goes to the Consumer Welfare Fund and not to the importer.
Background: why CIF importers paid IGST twice
Under a CIF import contract, the price the Indian importer pays to the foreign supplier already includes the cost of ocean freight and insurance up to the Indian port. Customs law computes IGST on imported goods on this full CIF value, so the freight component is already taxed once as part of the landed value of the goods. Separately, under Notification 8/2017-Integrated Tax (Rate) and Notification 10/2017-Integrated Tax (Rate), the government had treated the ocean-freight service itself as a distinct supply, and cast the liability to pay IGST on that service — under reverse charge — on the Indian importer, computed on a notional value of the freight (typically 10% of the CIF value where the actual freight was not ascertainable). The result was that Indian importers on CIF terms were paying IGST on the same freight component twice: once inside the CIF-value-based IGST at customs, and again separately under RCM on the deemed freight service.
The Mohit Minerals ruling, and what it actually held
Union of India v. Mohit Minerals Pvt. Ltd., (2022) 10 SCC 700, decided on 19 May 2022, is routinely summarised as striking down the levy for "double taxation". That summary will not survive citation in a reply, and the precise ratio matters when the department pushes back. What the Supreme Court held is that a CIF import is a composite supply: the Indian importer already bears IGST on the whole of it, freight included, on the customs value of the goods. A separate IGST levy on the same importer in respect of the supply of transportation service therefore falls foul of Section 8 of the CGST Act, which requires a composite supply to be taxed as a single supply. On that reasoning, Entry 9(ii) of Notification 8/2017-Integrated Tax (Rate) and Entry 10 of Notification 10/2017-Integrated Tax (Rate) were held ultra vires to that extent. Frame the claim on Section 8 and the composite-supply reasoning, not on a general double-taxation grievance.
The ruling also carried a significant, broader holding on GST federalism — that recommendations of the GST Council are recommendatory rather than binding on Parliament and State legislatures.
One correction that materially widens the class of claimants: the levy was not discontinued when the judgment was delivered. The offending entries remained on the statute book for a further sixteen months and were omitted only by Notification No. 11/2023-Integrated Tax (Rate) and Notification No. 13/2023-Integrated Tax (Rate), both dated 26 September 2023, with effect from 1 October 2023. A great many importers, and their consultants, continued paying RCM IGST on CIF ocean freight through FY 2022-23 and into the first half of FY 2023-24. Those payments are equally recoverable, and being the most recent they are the ones with the strongest position on timing. Any exposure review that stops at FY 2021-22 will miss them.
Nor does the later omission date give the department an argument for the earlier years. In Sunrise Timply Company Pvt. Ltd. v. Union of India, WPA 10415 of 2025, decided 19 January 2026, the Calcutta High Court rejected precisely that contention and held that a judgment of a constitutional court declaring a law invalid operates retrospectively unless expressly made prospective — so RCM IGST on ocean freight was not payable for periods before 1 October 2023 either.
Hurdle 1: limitation — and why the route you choose decides it
Section 54 of the CGST Act requires a refund claim to be filed within two years of the "relevant date", which for a straightforward refund of tax paid is the date of payment. Applied mechanically, RCM IGST paid in FY 2018-19 was time-barred before Mohit Minerals was even decided, and everything up to September 2023 is time-barred by now. That is why the choice of route, rather than any argument about the relevant date, determines whether the claim survives.
The framing sometimes offered — that the "relevant date" in Section 54 should be re-read as the date the levy was struck down — is not how the stronger authorities have decided these cases, and an importer who files an RFD-01 on that basis is likely to meet a time-bar rejection. The reasoning that has actually carried is more fundamental: Section 54 does not govern at all. Money collected under a levy that has been declared invalid was collected without authority of law, contrary to Article 265 of the Constitution, and its recovery is restitution rather than a statutory refund. In M/s Paradeep Phosphates Limited v. Additional Commissioner & Ors., decided on 22 January 2026, the Odisha High Court held exactly this — that the claim was "restitution flowing from a declaration of unconstitutionality", not a refund under Sections 54 or 56, because the very foundation of the levy stood invalidated. Having so held, the Court also directed interest at 6% per annum from the date of deposit to the date of refund, as a normal accretion on capital and compensation for deprivation of the use of money, rather than under the Section 56 statutory rate.
The practical consequence for an MSME or exporter sitting on an unclaimed amount is straightforward. Where the payment still falls inside two years of the relevant date, file under Section 54 in the ordinary way. Where it does not, which will be the case for most of this exposure, the claim belongs in a writ petition under Article 226 framed on Article 265 and restitution, with Mohit Minerals, Sunrise Timply and Paradeep Phosphates pleaded, and with the interest claim made expressly rather than left to be assessed later. This is not uniform across every High Court and the outcome remains fact- and jurisdiction-sensitive, but the route is now reasonably clear and should be chosen deliberately at the outset — refiling after a rejection is considerably harder.
Hurdle 2: unjust enrichment — now settled, and settled against the importer
This is no longer a live dispute in which Revenue merely "sometimes argues" pass-through. The Supreme Court has decided it. In Union of India v. Torrent Power Ltd. (SLP (C) No. 13084/2025), decided 10 February 2026, the Court set aside a Gujarat High Court direction that had devised a mechanism for routing the ocean-freight refund back to consumers, and held that where the incidence of the tax has been passed on, Section 54 read with Section 57 admits of only one destination: the amount — ₹19,28,86,868 (about ₹19.29 crore) in that case — must be credited to the Consumer Welfare Fund, to be transferred within three months. The importer does not receive it.
Read that against your own facts before spending anything on the claim. The unjust enrichment bar requires the claimant to show that the incidence of the tax was not passed on to another person, typically the ultimate customer. For an importer with cost-plus, pass-through or landed-cost-based pricing, that showing is difficult and, on Torrent Power, failing it means the entire recovery is lost to the Fund even though the levy itself was invalid. The evidence has to be assembled first, not produced in answer to an objection: a CA certificate supported by contemporaneous costing records and the pricing methodology actually used in the relevant years, demonstrating that the specific RCM IGST amount was borne by the importer and was not a component recovered in the price charged to customers. Where the costing genuinely will not support that, the honest advice is that the claim is not worth pursuing, and saying so early saves the client professional fees and litigation cost.
Refund process and evidentiary checklist
| Requirement | What it typically needs |
|---|---|
| Identify the RCM IGST paid | GSTR-3B filings and challans showing RCM IGST paid on ocean freight for CIF imports, period-wise, across the whole window from 01.07.2017 to 30.09.2023 — do not stop the search at FY 2021-22 |
| Establish the refund basis | Mohit Minerals, (2022) 10 SCC 700, on the Section 8 composite-supply reasoning; the omission of the entries by Notfns. 11/2023 and 13/2023-IT(R) w.e.f. 01.10.2023; and Sunrise Timply (Cal HC, 19.01.2026) on retrospective operation for earlier periods |
| Choose the route | Section 54 refund only where the payment is still within two years of the relevant date; otherwise a writ petition under Article 226 framed on Article 265 and restitution, citing Paradeep Phosphates (Ori HC, 22.01.2026) |
| Clear unjust enrichment first | CA certificate and contemporaneous costing records showing the RCM IGST was not passed on in the sale price. Test this before filing — on Torrent Power (SC, 10.02.2026), failure sends the whole amount to the Consumer Welfare Fund |
| Claim interest expressly | Plead interest from the date of deposit; Paradeep Phosphates awarded 6% p.a. as compensation for deprivation of the use of money, independent of Section 56 |
Worked example
An importer of industrial raw materials paid RCM IGST on CIF ocean freight, computed at the notional 10% valuation prescribed under the relevant notification. A first pass over FY 2018-19 and FY 2019-20 throws up ₹6 lakh. Extending the search to the correct end date of 30 September 2023 — as it must be — adds a further ₹2.5 lakh paid across FY 2022-23 and the April to September 2023 quarters, taking the exposure to ₹8.5 lakh. That tail is the part most firms miss, and it is also the part with the least awkward timing position.
On route, the ₹6 lakh from FY 2018-19 and FY 2019-20 is well outside two years of the relevant date, so a Section 54 application on those amounts invites rejection; that portion belongs in a writ petition framed on Article 265 and restitution. Depending on the exact payment dates, part of the ₹2.5 lakh tail may still be inside the Section 54 window, in which case it should be filed conventionally rather than swept into the writ. The petition should plead Mohit Minerals on the composite-supply ground, Sunrise Timply on retrospective operation, and Paradeep Phosphates on both restitution and interest at 6% per annum from the dates of deposit — which, on ₹8.5 lakh sitting with the department since 2018, is itself a material part of the recovery.
Before any of that, test unjust enrichment. If the importer priced on a landed-cost-plus basis and the RCM IGST sat inside landed cost, Torrent Power means the ₹8.5 lakh goes to the Consumer Welfare Fund rather than to the importer, and the exercise is not worth commissioning. If the contemporaneous costing sheets show the RCM IGST was absorbed and not built into the price to customers, obtain the CA certificate on that basis and file. The order of work matters: costing evidence first, route second, petition third.
Common mistakes and red flags
- Assuming the refund is automatic simply because Mohit Minerals struck down the levy — both limitation and unjust enrichment must still be separately satisfied.
- Filing a refund claim without first reconstructing period-wise RCM IGST payment evidence from GSTR-3B and challans.
- Stopping the exposure review at FY 2021-22. The levy was omitted only w.e.f. 01.10.2023, so RCM IGST paid through FY 2022-23 and the first half of FY 2023-24 is equally recoverable — and is the most recent, best-positioned part of the claim.
- Filing an RFD-01 under Section 54 for payments made years ago on the theory that the "relevant date" has shifted to the date of the judgment. That is not the reasoning the stronger authorities have adopted, and it invites a time-bar rejection instead of a hearing on the merits.
- Treating the position as settled in the importer's favour everywhere — outcomes still vary by High Court and by how the petition is framed, and need case-specific evaluation.
- Not preparing a CA certificate or costing evidence on unjust enrichment until Revenue raises the objection, rather than building the file upfront — after Torrent Power this is the issue most likely to decide whether the money reaches the client or the Consumer Welfare Fund.
- Omitting to claim interest from the date of deposit, which on older payments can be a substantial part of the total recovery.
- Overlooking that only the RCM component on ocean freight for CIF imports is affected — IGST paid at customs on the CIF value of the goods itself is unrelated and not part of this refund.
What importers should do now
Businesses that imported on CIF terms at any point between 1 July 2017 and 30 September 2023 should first establish, from GSTR-3B and the RCM challans, exactly what was paid and in which tax periods. Run that search across the whole window; an exposure review that stops at FY 2021-22, as most do, will miss the FY 2022-23 and April-to-September 2023 payments that are both real and comparatively recent.
Then take the two decisions in the right order. Test unjust enrichment against the actual costing for the relevant years before committing to the claim, because after Torrent Power that single question decides whether the money reaches the business or the Consumer Welfare Fund, and there is no point building a petition on amounts that will not come back. If the costing supports the claim, choose the route deliberately: Section 54 where a payment is still within two years of the relevant date, and otherwise a writ petition under Article 226 on Article 265 and restitution, with interest from the date of deposit pleaded expressly. Outcomes remain fact- and jurisdiction- sensitive, so each claim needs individual evaluation rather than a template applied across the industry.
Related guides: if a Section 54 claim draws a deficiency memo or rejection, see our GST refund rejection and RFD-03 guide; for a demand or show-cause notice on the same imports, the GST notice reply guide; and for group structures importing through one GSTIN for several units, ISD vs cross-charge. Importers setting up or reviewing their customs registrations can start with our IEC and AD code documents guide.
Frequently asked questions
What did the Mohit Minerals judgment actually decide?
The Supreme Court in Union of India v. Mohit Minerals Pvt. Ltd., (2022) 10 SCC 700, decided 19 May 2022, held that a CIF import is a composite supply on which the Indian importer already pays IGST on the full customs value, freight included. A separate reverse-charge IGST on the same importer for the transportation service therefore violates Section 8 of the CGST Act, and Entry 9(ii) of Notification 8/2017-Integrated Tax (Rate) and Entry 10 of Notification 10/2017-Integrated Tax (Rate) were held ultra vires to that extent. It is the composite-supply reasoning, not a general double-taxation grievance, that should be pleaded. The Court also held that GST Council recommendations are not binding on the Centre and States.
Which periods does this refund actually cover?
The whole period from 1 July 2017 to 30 September 2023. The judgment was delivered on 19 May 2022, but the notification entries were omitted only by Notification Nos. 11/2023 and 13/2023-Integrated Tax (Rate) dated 26 September 2023, with effect from 1 October 2023, and a great many importers kept paying in the interim. RCM IGST paid in FY 2022-23 and the first half of FY 2023-24 is equally recoverable, and the Calcutta High Court in Sunrise Timply Company Pvt. Ltd. v. Union of India, decided 19 January 2026, confirmed that the earlier periods are covered too, the judgment operating retrospectively. Recovery still turns on clearing unjust enrichment and on choosing the correct route.
Has the two-year limitation period under Section 54 already expired for my old RCM payments?
For most of this exposure the two-year window has passed, but that does not end the claim. The stronger authorities do not re-read the relevant date in Section 54; they hold that Section 54 does not govern at all, because tax collected under a levy declared invalid was collected without authority of law contrary to Article 265, making its recovery restitution pursued in writ jurisdiction. The Odisha High Court so held in M/s Paradeep Phosphates Limited v. Additional Commissioner, decided 22 January 2026, and directed interest at 6% per annum from the date of deposit. Where a payment is still within two years of the relevant date, file under Section 54 in the ordinary way; where it is not, the claim belongs in a writ petition under Article 226.
What is unjust enrichment and why does it matter for this refund?
Unjust enrichment is the requirement that a refund claimant show the tax was not passed on to another person, typically the end customer, and it is now the decisive issue rather than a secondary objection. In Union of India v. Torrent Power Ltd. (SLP (C) No. 13084/2025), decided 10 February 2026, the Supreme Court held that where the incidence has been passed on, the amount must be credited to the Consumer Welfare Fund rather than paid to the claimant. An importer pricing on a cost-plus or landed-cost basis should therefore test its costing before filing, and support the claim with a CA certificate backed by contemporaneous costing records showing the RCM IGST was absorbed and not recovered in the price charged to customers.
Does this refund also cover the IGST I paid on the CIF value of the goods at customs?
No. This refund opportunity relates only to the separate reverse-charge IGST paid on the notional ocean-freight service value. The IGST paid at customs on the CIF value of the imported goods itself is a different levy and is not affected by the Mohit Minerals ruling.
What documents do I need to support a refund claim on RCM ocean freight?
You typically need GSTR-3B filings and RCM payment challans showing the period-wise amounts paid across the full window to 30 September 2023, a CA certificate with supporting contemporaneous costing records to clear unjust enrichment, and a reasoned position on which route applies to each payment date — Section 54 where still within two years of the relevant date, otherwise a writ petition on Article 265 and restitution, with interest from the date of deposit pleaded expressly.
If you imported on CIF terms and paid RCM IGST on ocean freight in earlier years, we can help evaluate your unclaimed refund exposure, assess the limitation position for your specific dates, and prepare the costing evidence needed to support the claim.
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