Union of India v. Mohit Minerals (2022)

Union of India v. Mohit Minerals Pvt. Ltd. (Civil Appeal No. 1390 of 2022, decided 19 May 2022) is a judgment of a three-judge bench of the Supreme Court of India—Justices D.Y. Chandrachud, Surya Kant, and Vikram Nath, with Justice Chandrachud authoring the opinion. The case arose from a challenge to two notifications issued under the Integrated Goods and Services Tax Act, 2017 (IGST Act): Notification No. 8/2017-Integrated Tax (Rate) and Notification No. 10/2017-Integrated Tax (Rate), both dated 28 June 2017. These notifications levied IGST on the ocean-freight component of goods imported into India on a Cost-Insurance-Freight (CIF) basis, and through a reverse-charge mechanism made the Indian importer liable to pay that tax. The Gujarat High Court in January 2020 had already declared the levy unconstitutional, and the Union of India appealed to the Supreme Court, which affirmed the High Court. The constitutional anchors of the dispute were Articles 246A, 269A, and 279A of the Constitution, inserted by the Constitution (One Hundred and First Amendment) Act, 2016, which created the GST framework and the GST Council.

The procedural core of the case turned on the architecture of the IGST levy on imports. Under a CIF contract, the foreign exporter arranges and pays for shipping; the Indian importer pays a single inclusive price. The importer already pays IGST on the full CIF value of the goods at the point of import under Section 5(1) of the IGST Act read with the Customs Tariff Act. The impugned notifications additionally taxed the freight component again—this time treating the supply of transportation services by a foreign shipping line to a foreign exporter as a separate taxable supply, with the Indian importer designated as the recipient liable under reverse charge. The Court held this amounted to taxing the same transaction twice and, more fundamentally, that the importer was neither the recipient nor a party to the shipping contract, rendering the levy beyond the scope of a valid supply.

The Court advanced two principal lines of reasoning. First, on the double-taxation point, it held that because IGST on the composite supply of imported goods already subsumed the freight element within the CIF value, a separate levy on freight violated the structure of the GST law and Section 8 of the IGST Act, which treats such transactions as composite supplies. Second, and far more consequential, the bench addressed the legal status of GST Council recommendations. The Union had argued that because the notifications flowed from the Council's recommendations, they carried binding force. The Court rejected this, holding that under Article 279A the recommendations of the GST Council are recommendatory and persuasive, not binding on either Parliament or the State legislatures. It read Article 246A as conferring simultaneous, independent legislative power on the Union and the States, and characterized the Council as a deliberative body fostering "cooperative federalism" through dialogue rather than dictation.

The decision reverberated immediately through India's tax administration and intergovernmental fiscal politics. In the weeks following the 19 May 2022 ruling, several opposition-governed states—including Kerala, Tamil Nadu, and West Bengal—publicly invoked the judgment to argue for greater autonomy in setting state-level GST rates and to press for an extension of GST compensation. The 47th GST Council meeting held in Chandigarh on 28–29 June 2022 took place against this backdrop, with the Union Finance Ministry emphasizing that the Council had functioned by consensus in all but one of its meetings and that the judgment did not destabilize the federal compact. The Central Board of Indirect Taxes and Customs (CBIC) ceased enforcement of the ocean-freight levy, and pending refund claims by importers proceeded on the strength of the ruling.

Mohit Minerals must be distinguished from adjacent doctrines of Indian fiscal law. It is not a ruling on the aspect theory or on legislative competence under the older List I–List II scheme of the Seventh Schedule, both of which governed the pre-GST regime. Nor should it be conflated with the cooperative federalism rhetoric of cases such as the NCT of Delhi disputes, though it draws on similar federal principles. It is distinct from the doctrine of pith and substance and from the concept of repugnancy under Article 254, because Article 246A creates a special, self-contained source of concurrent taxing power that operates outside the ordinary scheme of Lists. The judgment's federalism holding is best read alongside Article 279A(9), which prescribes the Council's weighted voting—the Union holding one-third and the States collectively two-thirds—a structure the Court cited as evidence of deliberative balance rather than central supremacy.

Controversy persists over the judgment's reach. Critics, including some within the Union government and several tax commentators, argued that the federalism observations were obiter dicta—remarks beyond the narrow question of the ocean-freight levy—and therefore not strictly binding precedent. Proponents counter that the reasoning on Article 279A was integral to rejecting the Union's argument that Council recommendations compelled the notifications. A practical concern is that if states begin diverging on rates, the "one nation, one tax" premise of GST could fray; in practice, no major state has unilaterally departed from agreed rate slabs since 2022, and the Council has continued to operate by consensus. The judgment has been cited in subsequent litigation over the scope of Council recommendations and the validity of various GST notifications.

For the working practitioner—whether a civil services aspirant preparing GS Paper III, a tax policy analyst, or a desk officer tracking Centre-State fiscal relations—Mohit Minerals is foundational. It clarifies that India's GST is built on shared, not hierarchical, sovereignty, and that the GST Council is a forum for negotiated consensus rather than a supra-legislature. UPSC mains questions on fiscal federalism, the GST Council's design, and the limits of executive notification power draw directly on this ruling. It also exemplifies how a narrow tax dispute over freight can yield a constitutional principle reshaping the balance of power within the Indian Union.