The Madras High Court has quashed a Public Notice issued by the Customs Department that prohibited Container Freight Stations (CFS) from collecting GST on auctioned, uncleared cargo.
The bench of Justice N. Anand Venkatesh observed that the customs authorities had acted beyond their jurisdiction and that such directions were contrary to the CGST Act, 2017.
The dispute arose after the Customs Department directed custodians of uncleared goods — such as CFS operators — not to levy GST on the sale of cargo auctioned under Section 48 of the Customs Act, 1962. According to the impugned notice, the bid value for such auctions was considered “cum-duty”, inclusive of customs duty and IGST, and thus, no separate GST should be charged to the auction purchaser.
The CFS operators argued that the directive interfered with their statutory obligations under the CGST Act, which requires GST to be collected on any “supply of goods or services.” They contended that auctioning of unclaimed goods constitutes a taxable supply, and the customs department had no authority to exempt such transactions from GST.
The petitioner contended that the Customs Department had no jurisdiction to issue directives on GST matters, as GST is governed by a separate statutory regime under the CGST Act. Once customs duty and IGST are discharged through a bill of entry, the customs process ends, and any subsequent sale (auction) is an independent taxable supply under GST law. The Public Notice contradicted Circular No. 50/2005-Cus., which explicitly allows recovery of local taxes such as sales tax (now GST) from the buyer.
The customs department contended that the bid value was inclusive of IGST, already accounted for as part of the import duty, and levying GST again would amount to double taxation. The Public Notice merely clarified existing procedures to prevent overcharging of auction purchasers.
The court held that the Public Notice ran contrary to CBIC’s 2005 Circular, which permitted charging of local taxes from buyers. Once the manual bill of entry is filed and customs duty, including IGST, is paid, the Customs Department’s jurisdiction ceases. The IGST paid at import and GST payable on auction sale are distinct levies — the former under the Customs Tariff Act and the latter under Section 9 of the CGST Act. During auction, the CFS becomes the supplier, and the successful bidder is the recipient — making it a taxable transaction under Section 7(1) of the CGST Act. The Customs authorities have no power under Sections 157–159 of the Customs Act to issue directions affecting GST collection.
Holding the Public Notice to be “wholly without jurisdiction or authority,” the Court quashed both the Public Notice dated February 12, 2021, and a consequential letter issued on December 22, 2021, against German Express Shipping Agency for collecting GST.
The Court ruled that, “the impugned Public Notice is contrary to Sections 3, 7(1), and 9(1) of the CGST Act, 2017, and Sections 157, 158, and 159 of the Customs Act, 1962, and is therefore liable to be set aside.”
The court allowed all three writ petitions, and connected miscellaneous petitions were closed without costs.
Case Details
Case Title: M/s. National Association of Container Freight Stations Versus The Joint Commissioner of Customs
Case No.: WP No. 11222 of 2022, WP NO. 152 OF 2022 AND WP NO. 149 OF 2022
Date: 23.10.2025
Counsel For Petitioner: Radhika Chandra Sekhar
Counsel For Respondent: K.Mohanamurali
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