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2022 (5) TMI 1019 - AAR - GSTClassification of services - support services or not - Place of supply - Providing support services for water transport - to be classified under SAC 9985 of Notification No. 11/2017-Central Tax (Rate) dated June 28, 2017 or not - export of services or not - HELD THAT - The applicants are registered under the Companies Act but not under the GST Act. They have stated that they propose to provide end-to-end services to the shippers located outside the Indian territory with respect to the vessels of such customers, when their vessels calls on the Indian Port. They have stated that the services proposed relates only to the vessel when they call on Indian Ports and not related to the Cargo the vessel carry. The services proposed to be provided by the applicant to their clients are end to end requirements of the vessel when such vessel calls on the Indian Port. This being in the nature of supporting the activities of their clients, the applicant states that the services are covered under 'Supporting Services -others'. On going through the various service description under the Heading 9985, it is found that the services of the applicant, may at best fit under 'SAC 998599- Other support services nowhere else classified' - the services proposed as per the write-up and the pictorial representation above, is Berth hire services for docking the vessels; Lighthouse dues; customs/documentation for the vessel to enter/exit the territorial waters/port; husbandry services; Survey/Launch hire services; Requirement of Crew/fuel for the vessels. Thus, it is seen that the applicant extends vessel related services, supporting the shipper to facilitate the entry/exit of the vessel in the Indian Ports, i.e., the services are more in the nature of support services for transport of vessels' and more aptly will be classifiable under SAC 9967. Thus, the services are support services classifiable under SAC 9967 and the applicable rate is as per SI.No. 1 l(ii) of Notification No. 11 /2017-C.T.(Rate) dated 28.06.2017 as amended. Export of services or not - HELD THAT - It is seen that the services extended are to enable the vessel reach the port; leave the port and undertaking repairs/ requirements of the vessel 8s crew when such vessel is in the Indian territory. Thus, the entire gamut of services are towards bringing the vessel(goods) to the Port, enabling the vessel(goods) leave the port and undertaking repairs, requirements of the vessel(goods) and therefore, it is seen that the services extended are intrinsically rely on the presence of the Vessel(goods) in the Indian territorial waters/port. In the case at hand, the applicant is extending the 'support services for water transport' which includes services facilitating berthing of the vessel, liaising with jurisdictional authorities and attend to the requirement of the vessel when the vessel is in Indian territory and the service jurisdiction of the applicant rests with the applicant until the vessel exits the Indian waters. Thus, the applicant extends vessel related services to their customers when the vessel enters the Indian territory and the service with respect to the said vessel ends when the vessel exits the Indian territory. In other words, the proposed services are rendered in respect of the vessels which are physically available in the Indian Territory and therefore, the proposed services are squarely covered under Section 13(3) - the place of supply of service in the location where the services are actually performed, which is the taxable territory. Having decided that the 'Place of supply' is the taxable territory wherein the vessels call in, the condition of the place of supply being outside India is not satisfied in the case at hand. Therefore, the proposed supply is not an 'Export of Service'. Accordingly, the proposed supply classifiable under SAC 9967 is taxable to GST @ 18% under Sl.No. 11(ii) of the Notification No. 11/2017-C.T.(Rate) dated 28.06.2017 as amended read with SI.No. 11(ii) of Notification No.II(2)/CTR/532(d-14)/2017 in G.O. Ms.No.72, CT R(B1), dt.29-6-2017 - the claim of the applicant that they are not 'Intermediary' under GST and therefore, their location, i.e., the taxable territory is not the Place of Supply as per Section 13(8) of IGST Act 2017 is not examined as considered Void.
Issues Involved:
1. Classification of specified services under SAC 9985 of Notification No. 11/2017-Central Tax (Rate) dated June 28, 2017. 2. Determination of whether the specified support services qualify as export of services. Issue-wise Detailed Analysis: 1. Classification of Specified Services: The applicant sought to classify their services as "support services" under SAC 9985. They proposed to provide end-to-end support services to overseas shipping lines/charterers, including handling registration, coordinating port activities, managing documentation, and attending to crew matters. The applicant argued that these services should be classified under SAC 9985, specifically under "Support services other than (i) and (ii) above" as per Notification No. 11/2017-Central Tax (Rate) dated June 28, 2017. Upon examination, the authority found that the services proposed by the applicant, such as berth hire services, lighthouse dues, customs/documentation, husbandry services, and survey/launch hire services, are related to the vessel's operations at Indian ports. These services are more aptly classified under SAC 9967, which covers "Supporting services for water transport (coastal, transoceanic, and inland waterways)," including port and waterway operation services, pilotage, berthing services, and other supporting services for water transport. Therefore, the authority ruled that the services should be classified under SAC 9967 and are liable to CGST @ 9% and SGST @ 9% as per SI.No. 11(ii) of Notification No. 11/2017-C.T.(Rate) dated 28.06.2017. 2. Determination of Export of Services: The applicant also sought a ruling on whether their support services would be considered as export of services. According to Section 2(6) of the IGST Act, 2017, export of services must meet five conditions: the supplier must be located in India, the recipient must be located outside India, the place of supply must be outside India, payment must be received in convertible foreign exchange, and the supplier and recipient must not be merely establishments of a distinct person. The authority noted that the applicant is located in India, the recipient is located outside India, and payment is to be received in convertible foreign exchange. However, the critical condition to be examined was whether the place of supply is outside India. According to Section 13(3) of the IGST Act, the place of supply for services related to goods that are physically available in India is the location where the services are actually performed. Since the proposed services are related to vessels present in Indian territorial waters, the place of supply is within the taxable territory of India. Therefore, the authority concluded that the proposed services do not qualify as export of services because the place of supply is not outside India. Ruling: 1. The applicant's services are classified under SAC 9967 and are liable to CGST @ 9% and SGST @ 9%. 2. The proposed services do not qualify as export of services under Section 2(6) of the IGST Act, 2017, as the place of supply is within the taxable territory of India.
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