ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 04.11.2025
Madras High Court Strikes Down Customs Public Notice on GST for Auctioned Cargo
This Article has been written by Shri Ravi Shekhar Jha, Advocate based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.
The Madras High Court, in a landmark judgment delivered on October 23, 2025, quashed a Public Notice issued by the Joint Commissioner of Customs (Chennai-IV) dated February 12, 2021, regarding the applicability of GST on the clearance of uncleared/unclaimed cargo. The judgment was delivered by Honโble Justice in response to three writ petitions filed by M/s. โ National Association of Container Freight Stations and M/s. โ German Express Shipping Agency (India) Pvt. โ Ltd.
Background of the Case
The petitioners, who are Container Freight Stations (CFS), challenged the Public Notice issued by the Customs Department, which directed custodians not to collect GST on goods sold through auction under Section 48 of the Customs Act, 1962. โ The petitioners argued that the notice was contrary to the provisions of the Customs Act, 1962, and the Central Goods and Services Tax (CGST) Act, 2017, and was issued without jurisdiction. โ
The petitioners contended that the auction of unclaimed or uncleared cargo constitutes a supply of goods under Section 7(1) of the CGST Act, making it liable for GST under Section 9(1) of the CGST Act. โ They further argued that the custodian provides a service by auctioning the goods, which also attracts GST. โ The respondents, however, maintained that the bid amount for auctioned goods already includes IGST, and collecting GST on the bid amount would lead to double taxation. โ
Key Observations by the Court
The following key observations in the judgment:
- Jurisdiction of Customs Authorities: The court held that the Customs Department does not have the jurisdiction to issue a Public Notice directing custodians not to collect GST. โ The authority to regulate GST collection lies solely with the GST authorities under the CGST Act.
- Separate Taxable Transactions: The court clarified that IGST paid on import is a levy under Section 3(7) of the Customs Tariff Act read with Section 5 of the IGST Act, whereas GST on auction sales is a levy under Section 9 of the CGST Act. โ These are distinct transactions and cannot be considered as double taxation. โ
- Auction Sale as Supply of Goods: The court emphasized that when goods are sold through auction, the title of the goods is transferred to the auction purchaser, and the goods lose their character as imported goods. โ The auction sale is a taxable supply under the CGST Act, and GST must be collected on the sale price. โ
- Role of CFS as Service Providers: The court noted that CFS, as custodians under Sections 45 and 141(2) of the Customs Act, provide services such as storage, delivery, and auctioning of goods. โ These services are liable for GST, and custodians must collect and remit GST to the exchequer. โ
Judgment and Impact
The court quashed the Public Notice dated February 12, 2021, issued by the Joint Commissioner of Customs, declaring it as wholly without jurisdiction and contrary to the provisions of the CGST Act, 2017, and the Customs Act, 1962. โ The consequential notice issued by the Deputy Commissioner of Customs was also quashed.
This judgment reinforces the principle that customs authorities cannot interfere in matters related to GST collection, which falls under the exclusive domain of GST authorities. โ It also clarifies the distinction between IGST on imports and GST on auction sales, ensuring compliance with the legal framework. โ
Conclusion
The Madras High Courtโs decision is a significant step in upholding the jurisdictional boundaries between customs and GST authorities. โ It provides clarity to custodians and auction purchasers regarding their tax liabilities and ensures that the process of auctioning unclaimed cargo is conducted in accordance with the law. This judgment is expected to have a far-reaching impact on the operations of Container Freight Stations and the interpretation of tax laws in similar cases.
Source: Madras High Court
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