2018 (6) TMI 702 - AAR - GST

Supply of goods - inter-state trade - Exemption from GST - outward supplies made to ocean going merchant vessels on foreign run, Indian Naval Ships and Indian Coast Guard Ships - Reverse charge - Whether appellant are exempted from tax under GST on their outward supplies made to ocean going merchant vessels on foreign run, Indian Naval Ships and Indian Coast Guard Ships or not? - If at all they are liable for GST on their outward supplies whether they can collect the GST from the recipient for the goods namely - (a) Ocean going merchant vessels on foreign run; (b) Indian Naval Ships; and (c) Indian Coast Guard Ships or from their authorized agents. Held that - The goods which are received by the applicant are within the Customs area as defined under Section 2 (11) of the Customs Act, 1962. Accordingly goods cleared / supplied by the applicant is to be treated as supply of goods in the course of inter-State trade. Furthermore, the goods supplied by the applicant is also not an exempt supply as per the definition under Section 2 (47) of the Central Goods and Service Tax Act, 2017 as it is neither nil rated or being exempt by any Notification - some of the supplies of applicant may fall under the definition of exports which is considered a zero rated supply. However, the same is not within the prerogative of present application. Ruling - The applicant are not exempted from tax under GST on their outward supplies made to ocean going merchant vessels on foreign run, Indian Naval Ships and Indian Coast Guard Ships. The applicant can collect the applicable GST from their customers, in case it is not exports. However, in case of exports the option lies with the applicant based on manner of exports i.e. whether they intend to export under bond or on payment of tax.

Summary

Issues involved:
1. Whether the applicant is exempt from GST on outward supplies to specific vessels.
2. If liable for GST, can the applicant collect GST from the recipients.

Analysis:
Issue 1:
The applicant, holding a Special Warehouse License under the Customs Act, sought an Advance Ruling to determine if they are exempt from GST on supplies to ocean-going merchant vessels, Indian Naval Ships, and Indian Coast Guard Ships. The Assistant Commissioner confirmed no pending proceedings or final orders against the applicant on the raised issue. The applicant provided documentary evidence during a personal hearing, including relevant licenses, certificates, and supply details. The ruling authority examined statutory provisions, defining customs area, export of goods, India, exempt supply, and inter-State trade. It was observed that the goods received by the applicant fall within the customs area, making the supplies inter-State trade and not exempt from GST.

Issue 2:
Regarding the second issue, the ruling authority noted that while some supplies may qualify as exports, they do not fall under the present application's purview. Referring to Circular No. 46/2017-Customs, it was highlighted that transactions involving warehoused goods are considered supplies under the CGST Act and IGST Act, taxable under section 9 of the CGST Act. Such transactions before crossing the customs frontiers of India are treated as inter-State supplies, subject to IGST. The ruling concluded that the applicant is not exempt from GST on outward supplies to the specified vessels and can collect applicable GST from customers, with the option dependent on whether the supplies qualify as exports under specific conditions.