2018 (11) TMI 486 - AAR - GST

Exemption from GST - outward supplies made to ocean going merchant vessels on foreign run, Indian Naval Ships and Indian Coast Guard Ships - zero rated supplies or not - Collection of GST from Ocean going merchant vessels on foreign run/ Indian Naval Ships/ Indian Coast Guard Ships or from their authorized agents. Held that - As per section 88(A) of Customs Act, 1962, the goods supplied to merchant ships on foreign run will be treated as export. As per section 16 of IGST Act 2017, the exports will be treated as zero rated supplies. Ruling - The outward supplies made by the applicant to a) ocean going merchant ships which are in foreign run, b) Indian Navy ships, c) Indian Coast guard ships, will be treated as exports .

Summary

Issues:
1. Exemption from tax under GST on outward supplies to specific vessels.
2. Liability for GST on outward supplies and collection from recipients.
3. Determination of whether transactions qualify as 'export' for zero-rated GST treatment.

Analysis:
1. The applicant, a duty-free ship store supplier, sought an advance ruling on tax exemption for outward supplies to ocean-going merchant vessels, Indian Naval Ships, and Indian Coast Guard Ships. The Authority ruled that the applicant is not exempt from GST on such supplies.

2. The ruling clarified that the applicant can collect GST from customers for non-export supplies. However, for exports, the applicant has the option to decide whether to export under bond or by paying tax. The Appellate Authority later directed a fresh ruling on whether the transactions qualify as 'export' for zero-rated GST treatment.

3. In the subsequent hearing, the applicant presented facts supporting their position that the transactions should be classified as 'exports.' The goods imported by the applicant, stored duty-free in a special warehouse, are supplied to specific vessels under customs regulations. The legal provisions, including definitions of 'export of goods' and relevant sections of the Indian Customs Act, were considered.

4. The ruling authority determined that the outward supplies made by the applicant to ocean-going merchant ships in foreign run, Indian Navy ships, and Indian Coast Guard ships qualify as 'exports.' This classification entitles the supplies to zero-rated GST treatment, aligning with the provisions of the IGST Act 2017.

Therefore, the judgment concluded that the applicant's supplies to the mentioned vessels are considered 'exports' for GST purposes, warranting zero-rated treatment under the law.